Your credit score is one of the most important things that can enhance your possibility to get approval for a home loan or prevent you from getting approval. While a good credit will work in your advantage and makes you eligible for a lower mortgage rate, low credit lowers your creditworthiness and thus creates roadblocks in your path of getting approval.
However, that does not mean you should stop dreaming of having a home. It is because there are house loans for bad credit in Houston. Wondering what these are? Here are a few loan programs that you can get approval with low credit score
Are you a first time home buyer? Don’t you have a good credit score? Are you not ready to come with a decent down payment? If you are answering positively to all these questions, then an FHA loan can give you financial assistance. Guaranteed by the Federal Housing Administration, it is a specially designed home loan program that allows home buyers to approval for the loan with as low as 500 credit score and 3.5% down payment. But as the loan is offered by mortgage lenders, not by the FHA, the credit requirement can vary slightly. However, the requirement will be lower than traditional loan programs. So, you can easily get approval.
It is another specially designed home loan program. Issued by the U.S. Department of Veterans Affairs (VA), it helps veterans, military service persons and their surviving spouses fulfil their dream of having a home. Though it is a government-backed home loan, it is not provided by the VA. The mortgage lenders offer this loan. But like the FHA loan, VA loan does not have any minimum credit score standard. However, lenders will ask for a credit score. But as it is backed by the VA and so, it much secured and one get approval with a lower credit score. So, if you are a veteran, military service person or a surviving spouse, you can easily apply for this loan and buy a home of your choice.
Another home loan option for a borrower with a low credit score is USDA home loans. This loan is specially designed for low-to-moderate-income homebuyers and id guaranteed by the US Department of Agriculture. This guarantee works as a form of insurance protecting USDA mortgage lenders, so they can offer low credit score, below-market interest rates and zero-down. But with this loan, you can buy a house only in the rural area. So, if you are ready to buy a house in a rural area and have low-to-moderate income, then you can easily qualify for this loan.
So, FHA, VA and USDA are the top three home loan options that a low-credit borrower can apply for. And if you take steps to improve your credit score, you could have many more options. Therefore, do everything that you can do and then apply for a home loan program.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.