Can I Qualify For A Home Loan With Poor Credit

Dated: 03/16/2018

Views: 1032

The Minimum FHA Credit Score

The FHA requires a credit score of 580 to qualify for the loan. That’s the FHA, though. Certain lenders may require a higher credit score. It depends on what your other factors look like. For example, if you have a high debt ratio and unstable income, a lender probably won’t accept a 580 score. That’s three risky factors – what are the odds you’ll make your mortgage payments on time? In the eyes of the lender, it’s not very high.

Click to See the Latest Mortgage Rates»

The Exception to the Rule

An unknown fact about the FHA is that they will actually allow scores as low as 500. There’s a catch, though. You will have to put down a large down payment. Anyone with a credit score between 500 and 579 must put down 10% on the home. This takes away from the benefits of the FHA loan, as the largest benefit is the low down payment requirement.

Getting Over Bad Credit

Putting the credit score aside, lenders also look at your credit history. While they focus on the score to determine the size of your down payment, the history matters more.

Let’s say you have a 600 credit score, but you have three late payments in the last 3 months on another debt. This doesn’t look good to the lender. Your score is high enough to qualify for the loan, but your history shows a pattern of irresponsibility.

If you have a blemished credit history, you’ll have to take steps to get over it:

  • Bring any late payments current – Try to have all timely payments before the lender pulls your credit. If you have late payments in the past, you will at least show that you were able to get over them. If you have an explanation for the late payments, you’d be in even better shape.

  • Take time to recover from a bankruptcy or foreclosure – The FHA loan has specific waiting periods after a BK or foreclosure. Generally, you must wait 2 years. Regardless, you must prove that you picked up the pieces and can handle your financial responsibility now.

  • Straighten up your credit – If you have a lot of debt, try to get yourself out of it. Pay your credit cards down or off, if you can. Just don’t close the old accounts. You need the older accounts to help keep your average account age high. The older your accounts, the higher your credit score will go.



2 comments in this topic

  • Posted by Gary
    Excellent properties... Thank you for your kind consideration Gary
  • Posted by Gary
    Excellent properties... Thank you for your kind consideration Gary

Latest Blog Posts

Seller Checklist for a Good Home Inspection

It is always a really good idea to get ahead of the game when preparing your home for sale. Did you know that the home inspection period, called the Option Period here in the great state of Texas,

Read More

Preparing To Buy A Home

HOW TOPrepare to Buy a Home Talk to mortgage brokers. Many first-time home buyers don’t take the time to get prequalified. They also often don’t take the time to shop around to find the

Read More

Tips for Saving Toward Your Down Payment

Are you thinking about buying a home, but don’t have enough money for the down payment?  Many people find themselves in this situation when they are preparing to purchase a home,

Read More

Do you need a Plumber?

You didn’t do anything different, but all of a sudden the garbage disposal is smoking and water is backing up in the sink. Is your plumbing possessed? Should you just set the whole house on

Read More