Bad Credit Loans
Do you have the money for a down payment and the income to cover the monthly payment on a mortgage but don’t have the best credit? That’s okay! Home Loans can still help you find a way to purchase a home.
What Is Considered a Bad Credit Score?
When it comes to FICO scores and getting a home mortgage, a score below 670 could be considered subprime. Typically, a FICO score between 580 – 669 is considered fair credit, which means you probably won’t get to have the best interest rates available. However, depending on the rest of your financial situation, you should still be able to be approved for a mortgage. A bad credit score is a score between 300 and 579. If your score is over 500, there is still hope depending on the factors causing your low score. However, if your score is below 500, you’ll need to wait until your score improves. We’d be happy to give you some advice on how to raise your score if that’s the situation you’re in.
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We Look At More Than Just Your Credit Score
We understand that sometimes your credit score does not tell the whole story. In addition to looking at your FICO score, these are some of the factors that will determine if you can qualify for a mortgage:
- Cash available for a down payment
- The total amount of debt you have
- Number of accounts in collections
- Your annual income
Generally speaking, if your score is bad, having more cash available to use toward your down payment will be your best bet. This will reduce the amount you need to be financed, reducing the risk on the lender’s side.
What Types Of Loans Are Available If I Have Bad Credit
Conventional – Typically, the minimum credit score allowed on a conventional loan is 620, but that isn’t a set-in-stone number. Again, factors like your down payment amount and your annual income could play a role in getting you qualified with a lower score.
FHA – The minimum credit score allowed on an FHA loan is 500. However, you will need to come in with at least 10% down if your score is that low. FHA loans are only available for the purchase of a primary residence.
VA – VA loans are only available to veterans or those who are currently serving in the armed forces. This type of mortgage has more flexible credit score requirements, and scores as low as 580 can be approved. VA loans do not require a down payment either, so if you are eligible, a VA loan is an excellent way to get into a home.
Ready To Apply For a Mortgage?
Even if you don’t have perfect credit, we would love to have the opportunity to discuss your real estate goals with you. Also, keep in mind, that if you are worried about having to pay higher interest rates due to your low credit, you could always get into a home, work on raising your score and then refinance to get lower rates when you’re able.