Buying A Home With Bad Credit And Lower Credit Scores
This Article Is About Buying A Home With Bad Credit And Lower Credit Scores
The team at Gustan Cho Associates are experts in helping homebuyers Buying A Home With Bad Credit and lower credit scores. In fact, over 75% of our borrowers are folks that cannot qualify at other lenders due to those lenders having overlays on government and conventional loans. GCA Mortgage Group is a national five-star national mortgage company licensed in multiple states with no lender overlays on FHA, VA, USDA, and Conventional loans.
Most homebuyers think they need perfect credit, high credit scores, and a 20% down payment to qualify for a home mortgage. This is not the case. Homebuyers can qualify for a mortgage with credit scores as low as 500 FICO, and prior bad credit. Outstanding collections and charged-off accounts do not have to be paid to qualify for government and conventional loans. Homebuyers with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale can qualify for a mortgage after meeting the mandatory minimum waiting period guidelines.
Gustan Cho Associates has alternative home mortgage programs called Non-QM loans. There is no mandatory waiting period after bankruptcy and/or a housing event to qualify for a mortgage with non-QM loans. In this ARTICLE, we will discuss and cover Buying A Home With Bad Credit And Lower Credit Scores.
Buying A Home With Bad Credit And Qualifying For A Mortgage
The first step for homebuyers who are planning on buying a home with bad credit is to understand the mortgage process. Understand and learn the basics about the home buying and mortgage process and the various loan programs. Don’t assume things without checking all the facts about the individual loan programs and guidelines.
For example, many first-time homebuyers think you cannot have outstanding collections and charged-off accounts. Therefore, they immediately start paying off hundreds and even thousands of dollars of outstanding collections and charged-off accounts. You do not have to pay outstanding collections and/or charged-off accounts to qualify for a home mortgage. Do not hire a credit repair company to delete older derogatory credit tradelines.
Credit repair is not required to qualify for a mortgage. Credit disputes are not allowed during the mortgage process. Actually, credit repair can often backfire for borrowers. Older collections, charged-off accounts, and prior bad credit have little to no impact on your credit scores. Therefore, prior bad credit will not affect you when qualifying for a home mortgage. Prior bad credit, outstanding collections, and charged-off accounts have no impact on mortgage rates. Prior bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale has no impact on mortgage rates. However, borrowers should try to maximize their credit scores prior to applying for a mortgage.
The higher the credit scores, the lower the mortgage rates. There are quick tips for boosting your credit scores prior to applying for a mortgage.
Minimum Agency Mortgage Guidelines On Credit Scores To Qualify For A Home Mortgage
All home mortgage loans have a minimum credit score requirement set forth by FHA, VA, USDA, Fannie Mae, Freddie Mac. It is alright to have lower credit scores to qualify for a mortgage as long as you meet the minimum agency mortgage guidelines. However, you cannot have late payments in the past 12 months to get an approve/eligible per automated underwriting system.
Here are the minimum credit score requirements:
- HUD, the parent of FHA, require a 580 credit score to qualify for a 3.5% down payment home purchase FHA loan
- Homebuyers with under 580 credit scores and down to a 500 FICO can qualify for an FHA loan with a 10% down payment
- Fannie Mae and Freddie Mac require a minimum of a 620 credit score on conventional loans
- VA loans do not have a minimum credit score requirement as long as the borrower can get an approve/eligible per automated underwriting system (AUS)
Regardless of whatever the minimum credit score requirement is, borrowers should try to maximize their credit scores prior to applying for a mortgage. The higher the credit scores, the lower the mortgage rates. Paying down your credit card balances to under a 10% credit utilization ratio will maximize consumer credit scores. Timely payments in the past 12 months are a must to get an automated underwriting system approval. VA and FHA loans allow manual underwriting. Manual underwriting guidelines require 24 months of timely payments on all debts.
Qualifying For A Home Mortgage With A Lender With No Overlays
Borrowers who need to qualify for a home loan with bad credit with a five-star national mortgage company licensed in multiple states with no lender overlays, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.