There is still hope of getting home loans for people with bad credit.
After all, there are agencies and organizations that provide home loans for people with low scores.
However, the process of getting such a loan is not so simple!
Nevertheless, with thorough research and a careful understanding of what to do, you can still get your dream home despite your negative credit history.
Home Loans for People with Bad Credit: Helpful Factors
Compensating Factors to Make Up for Low Scores
Although home loans for people with bad credit are possible, compensating factors are needed to make up for their low scores.
Aside from that, there is also a need to show lenders you had experienced a financial difficulty that explains your low score.
Regardless, the most important thing is to show them that you have recovered from that financial hardship and are rebuilding your credit score.
To completely convince these lenders, you will need the following factors:
1. Large Down Payment
If you can show them that you can give a larger down payment — say more than 10% — then they’ll take that as a good sign.
This backs up the idea that you have recovered from your financial difficulty.
2. High Income
Showing lenders that you have a stable high income is another huge factor.
After all, there is no need for you to explain yourself to them when your income says it all.
3. No Outstanding Debt
This is another good indicator that you are a reliable borrower.
Being debt-free helps you convince lenders that you are finally re-establishing your credit score and have completely recovered from your financial downfall.
4. On-Time Rent Payments
Paying your house rents on time is also another good sign. This record indicates that lenders can trust and rely on you fully.
Home Loans For People With Low Scores
Now that you know what helpful factors will aid you in getting a home loan, it is time you learn what institutions offer home loans for people with bad credit.
1. Federal Housing Administration (FHA) Loans
FHA loans have helped many first-time home buyers.
What is good about FHA loans is if you are a first-timer, you can purchase a home without any down payments, so long as you are qualified for their home buyer programs.
2. Department of Veterans Affairs (VA) Loans
You can try for a VA loan if you are a veteran.
Their loans have benefits like no mortgage insurance and no down payment.
3. United States Department of Agriculture (USDA) Rural Development Loans
The USDA produced a home loan program that encourages homeownership in the country’s rural areas.
Their loans do not require a down payment, but they require a higher credit score than FHA.
4. FHA 203K Loan
If you are interested in getting a home that needs repairs or renovations, you can try the 203K loan.
This type of loan provides you with funds to purchase a new home, as well as an additional fund for repairs and renovations.
That means if you are planning to customize a new home, then this loan may be fit for you.
A video from Premium Contents explains more on how you can get a home loan with bad credit:
Don’t let stress eat away at you just because you have low credit scores.
Home loans for people with bad credit are available!
You just need to choose which one is suitable for what you’re looking for.
Are you now thinking of what home loan you would like to apply for? Comment now in the comments section below!