How to Buy a House With Less Than Perfect Credit

Having a good credit score is the first step for financial success. While it seems like this would be easy to achieve, there are a variety of different reasons that a buyer’s credit score may have taken a hit over the years. That being said, don’t fret if your credit score is less than optimal. There are still some options for you to secure a mortgage and buy a home. Here are some ways to make that happen.

Tips to Secure a Home Loan Without a Perfect Credit Score

  • Get a Private Loan – If there is someone you know who can act as your bank, this type of private loan could be beneficial to both of you. They most likely will not ask for a credit report, and you won’t have the excessive loan fees and strict terms like banks and mortgage companies do. They can make money from the interest on your loan, so it’s a win for all.
  • Secure a Loan Co-Signer – If you have a willing co-signer, this is a sure way to secure a home loan. The huge perk to this type of home financing is that their income will be considered when applying for the loan, giving you more buying power. You will still need decent credit, but it does not have to be perfect.
  • Government Backed FHA Loans – The Federal Housing Administration (FHA) offers FHA loans to help people become homeowners. These loans offer low down payments of typically 3.5% of the home’s value. FHA also gives loans for those with credit scores under 580 with a 10% down payment. They will consider probability of continued employment versus the two years of employment history that is usually required to qualify, which is helpful to many.
  • Put More Money Down – Often a borrower’s debt-to-income ratio is the main reason for loan denials. While you should certainly try to pay down as much debt as possible, it is a great idea to save as much money as possible for a down payment. This allows you to borrow less money, lower mortgage payments, and gear the lender’s attention towards your successful money habits.
  • Keep Improving – Continue to work on improving your credit score even as you attempt to get approved for a mortgage. Every single thing that you do makes a difference and will eventually add up to a positive credit rating you can be proud of.

Buying a home is the best investment you can make. Not only will this help you build a secure financial future, but it will save you so much money that would have otherwise been wasted on paying someone else’s mortgage via your monthly rental payments. With a little creativity and perseverance, you can make your less than perfect credit work for you and become a homeowner.


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