Buying A Home In Tennessee With Bad Credit And Low Credit Scores

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This ARTICLE On Buying A Home In Tennessee With Bad Credit And Low Credit Scores Was PUBLISHED On October 4th, 2020

Buying A Home In Tennessee With Bad Credit And Low Credit Scores

Tennessee is booming.

  • The state has no state income taxes and low cost of living
  • Many residents in high-taxed states are moving to Tennessee
  • For example, DuPage County, Illinois home prices have dropped 24% while property taxes have gone up 7%
  • Many Chicago area residents are fleeing Illinois to lower-taxed states like Tennessee
  • After the election of JB Pritzker, many Illinois homeowners who called Illinois home are moving to lower-taxed states like Tennessee
  • One of the many benefits for residents in Tennessee is no state income taxes, affordable housing, great weather, countless of annual festivals, and getting a lot of home for your money
  • One of the top concerns homebuyers have is Buying A Home In Tennessee With Bad Credit And Low Credit Scores

In this article, we will cover and discuss Buying A Home In Tennessee With Bad Credit And Low Credit Scores.

Tips In Buying A Home In Tennessee With Bad Credit And Low Credit Scores

Not everyone has 800 FICO, perfect credit, low debt to income ratios, and 20% down payment to purchase a home.

  • Buying A Home In Tennessee With Bad Credit And Low Credit Scores is possible
  • Many may dream of moving to Nashville or other areas of Tennessee but are concerned about Buying A Home In Tennessee With Bad Credit And Low Credit Scores
  • Gustan Cho Associates specializes and helps homebuyers relocating and Buying A Home In Tennessee With Bad Credit And Low Credit Scores
  • More and more companies are offering remote-wage earner positions where homebuyers can now purchase homes in any state

There are more opportunities for homebuyers to purchase a home out of state now than ever before. More and more employers are offering remote job positions and online jobs.

Not All Lenders Have The Same Mortgage Requirements

Not All Lenders Have The Same Mortgage Requirements

Not all lenders have the same mortgage requirements on government and conventional loans.

  • All lenders need to have their borrowers meet the minimum agency lending guidelines on government and conventional loans
  • However, lenders can have their own lending requirements that are above and beyond those of FHA, VA, USDA, Fannie Mae, and Freddie Mac
  • There are countless of Non-QM Lenders
  • Not all Non-QM Loans have the same mortgage guidelines
  • For example, a borrower who needs to qualify for a 3.5% FHA loan may have a 580 FICO with outstanding collections
  • A lender may disqualify this borrower for an FHA loan unless they have a 620 FICO and have all of his outstanding collections paid off
  • The borrower meets the agency HUD Guidelines but may not qualify with this lender due to their lender overlays
  • Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conforming loans
  • We have zero overlays on FHA, VA, USDA, Conventional loans. We just go off the AUS Findings

The above borrower may not qualify with the above lender but will definitely qualify at Gustan Cho Associates.

Qualifying For FHA Loans With Under 580 FICO

HUD, the parent of FHA, allows credit scores under 580 down to 500 FICO. However, borrowers with under 580 credit scores require 10% down payment. To get qualify for 3.5% down payment FHA Loans, the borrower needs a 580 FICO or higher. This is what Alex Carlucci, the top producer at Gustan Cho Associates advises:

Make sure to save for a bigger down payment. For those with a credit score under 580, a larger down payment is a necessity — not an option. However, potential buyers with scores in a slightly higher range could still benefit from offering more cash upfront to compensate for a low score. Minimum down payment required is 10% down. However, try to shoot for a down payment of 20% or more. A large down payment signals to the lender your ability to shoulder the loan despite a lackluster credit history, increasing your equity immediately and lowering your loan-to-value ratio. Even if your credit score is less than stellar, the more you have invested in the home, the less likely you are to default — and the less risk you pose to the lender.

Alex Carlucci, a Senior Vice President at Gustan Cho Associates helps more borrowers with under 580 FICO than any other loan officer at Gustan Cho Associates. Alex is also a contributing associate editor at Gustan Cho Associates Mortgage News.

FHA Loans Versus Other Loan Programs

What are FHA Loans Versus Other Loan Programs

FHA Loans are the best loan program for borrowers with prior bad credit, outstanding collections, charged-off accounts, and lower credit scores. FHA Loans are government loans backed by the U.S. Housing Administration (HUD). HUD is the parent of FHA. The reason why FHA Loans are more lenient than conventional loans issued by Fannie Mae and Freddie Mac is due to the government guarantee. Due to the government guarantee, lenders can originate and fund FHA Loans with 3.5% down payment, bad credit, low credit scores, high DTI, competitive rates, and a short waiting period requirement after a housing event and/or bankruptcy. For more information about the contents of this article, please contact us at Gustan Cho Associates at 262-716-8151 or email us at gcho@gustancho.com.

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