How Can I Qualify For A Mortgage With Bad Credit?
Having a low credit score significantly reduces your chances of securing a home loan, which can be even more damaging during these financially unstable times. But the good news is that having a low credit score or spotty payment history does not automatically preclude you from receiving a loan. If you have a low credit score, and you’re trying to get a home loan, there are a few ways for you to improve your chances.
Two ways to make yourself look better to lenders is to have a steady income and to accumulate some savings. This makes you look more financially responsible and may increase the odds that a potential lender will overlook past mistakes in your credit history. The longer you have maintained a steady income from the same source, the better it looks to lenders. Also, if you are likely to experience an increase in income within the near future (if you are eligible for a pay raise, for example), make sure to share this information with the lender. Having substantial savings, prolonged steady income, or the likelihood of increased income are known as “compensating factors” because they compensate for having a low credit score, and they can make a definite improvement in your odds of securing a home loan.
FHA Loan: A Good Down Payment Goes A Long Way
For people with a low credit score, an FHA (Federal Housing Administration) mortgage loan is your best bet, and having a larger down payment is one of the best ways to increase your chances of securing this type of loan. According to HUD (The Department of Housing and Urban Development), you can qualify for an FHA mortgage loan with as low as a 3.5% down payment. However, this percentage only applies to those with a credit score of over 580, and the Wall Street Journal reports that a down payment of at least 10% is necessary on a credit score below 580, and even then it’s uncertain you will qualify. A higher down payment shows to lenders that you are invested in your home and are therefore less likely to default on payments and lose your investment. The basic conclusion is that the higher your down payment, the more likely you are to qualify under the different brackets.
Repair Your Credit, Increase Your Score
As you can see, even a difference of 80 points on your credit score can make a large impact on qualifying for a mortgage loan, especially if you can’t afford a big down payment. The best way to improve your standing in the different brackets is to maximize your credit score through a respected credit restoration program. The majority of credit reports contain errors or inaccuracies that can bring your score down, and partnering with experienced credit experts to find and contest those errors with the credit bureaus can help you repair your score and increase your chances of landing a new mortgage loan. Why spend unnecessary thousands of dollars on a bigger down payment and higher interest rates when you can improve your credit score at a fraction of the cost? A higher credit score will improve your life in many other ways as well, allowing you to upgrade to a better car, qualify for new lines of credit, get better insurance premiums, and possibly even help you land a new job. Qualify for the loan you need to get into the house you’ve always wanted by restoring your credit today!
Have questions about qualifying for a mortgage with bad credit? Call Darbe Nokes today for a free credit consultation and weigh your options –
877-717-0213 or email her at firstname.lastname@example.org