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You Can Get A Home Mortgage With Lackluster Credit, But Should You?


Owning a house gives homeowners a feeling of financial stability, even if they must contribute a large portion of their income each month toward mortgage payments.  Unfortunately, most people in our society live paycheck to paycheck, and home ownership remains elusive.  The good news is that it is possible to qualify for a home mortgage even if your credit score is nothing to write home about.  Certain types of mortgages are designed especially for borrowers with modest incomes.  If you have a considerable debt burden, even if you have a stable income, you should tread carefully when applying for a home mortgage loan.  It is a good idea to strategize with a Jupiter credit repair lawyer about how a home mortgage loan fits into your long-term financial plans.

Home Mortgages for People With Unimpressive Credit Scores

Conventional mortgages are only available to people with strong credit scores.  Even if your credit score is respectable, all but the wealthiest people are vulnerable to high interest rates that drive up their monthly payment to where it is almost as expensive as the monthly rent would be for a similar property.  The bigger the down payment you pay on a house, the easier it is to get approved for a mortgage, but most people don’t have a penny left over at the end of each pay period, let alone enough to amass enough savings for a sizable down payment.  These are some mortgage loan options available for home buyers whose income and credit scores make them ineligible for conventional mortgages:

  • Federal Housing Administration (FHA) loans – If your credit score is at least 580, you can get an FHA loan if you put down a 3.5 percent down payment. If your credit score is between 500 and 579, you must put down a 10 percent down payment to qualify for an FHA loan.
  • Veterans Affairs (VA) loans – These loans are available for active-duty military personnel and military veterans, and they do not require a down payment. The requested credit score is 620, but in some cases, you can get approved if your credit score is as low as 580.
  • United States Department of Agriculture (USDA) loans – These loans are available for purchasing houses in rural areas, and they do not always require a down payment. The requested credit score is 640.
  • Fannie Mae Home Ready loans – These loans require a credit score of 620 and a down payment of three percent.
  • Freddie Mac Home Possible loans -With a three percent down payment, you can get these loans even if you have no credit history at all.

Will a Home Mortgage Bring You Financial Stability?

A home mortgage loan will only help your financial situation if you can keep up with the payments.  Even if you qualify for a home mortgage loan through one of the above programs, it might not be wise to borrow now.  Foreclosure of your home mortgage is far worse than delaying buying a house.  If you are determined to buy sooner rather than later, having a financially secure family member cosign on the loan can help you get a loan with a lower monthly payment.

Beware of Unaffordable Mortgage Payments

If unaffordable housing wrecked your credit in the past, a credit repair lawyer can help you avoid ending up in a similar situation this time around.  Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.



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