If you want to know the specifics, based on the credit score you are dealing with, the Better Rate Mortgage team is happy to help all potential St. Louis homebuyers find a suitable loan option for them.
Poor credit creates many financial difficulties for Americans, especially those hoping to become homeowners. But is it really true that if you have bad credit, you can say goodbye to the possibility of a loan?
Not exactly. Here are the main loan options for poor credit:
A conventional loan is a type of loan that is not backed by any federal program. With these types of loans, you’ll not meet such strict requirements about your income, down payment, or even credit score.
However, it’s not to say there are no requirements at all. Typically, conventional loan lenders will ask for a credit score of at least 620 to qualify, but if you have a higher income, you may be approved for one even with a score a bit below that.
The Federal Housing Administration insures an FHA loan. If you are a first-time homebuyer or have not purchased a home in the last 3 years, you may qualify for these types of loans even with a less than stellar credit score.
FHA lenders can usually ask for a credit score of around 580, but if you can make a 10% down payment, the score can go as down as 500!
VA loans are reserved for veterans or active-duty members of the armed forces. If that applies to you, you could qualify for a VA loan backed by the Department of Veterans Affairs. Surviving spouses can also apply for these types of loans.
These types of loans require no down payments and are usually more welcoming of bad credit scores to a certain extent. However, it greatly depends on the lender.
Another government-backed program, the USDA loan, comes courtesy of the US Department of Agriculture. They are meant to help people purchase homes in qualifying rural areas and require no down payment. However, most lenders will require at least a 640 credit score to qualify for this type of loan.
What If Your Score Is Really Bad?
If your credit score is around 600, you can likely find a lender, especially if you also have a good income. However, if you are experiencing a bad credit score, the harsh truth is that your options are greatly reduced. You may be able to find a suitable FHA loan, but it really depends on the level of “bad” we’re talking about.
Still, if you want to know the specifics, based on the credit score you are dealing with, the Better Rate Mortgage team is happy to help all potential St. Louis homebuyers find a suitable loan option for them. Contact us or call us at (314) 361-9979 right now, and let’s start figuring out what sort of loan is best for you.