Can I Buy A Home If My Credit Scores Are Below 600?

This BLOG On Can I Buy A Home If My Credit Scores Are Below 600 was UPDATED on March 10, 2017 and written by Gustan Cho NMLS 873293 Of Nationwide Mortgage & Realty LLC

One of the most common questions I get almost daily is  “Can I Buy A Home If My Credit Scores Are Below 600?”.

  • Many home buyers go to their local bank when they want to get qualified for a home loan.
  • That is the first thought that comes to mind when home buyers want to get a pre-approval letter, especially first time home buyers.
  • However, what most do not realize is that not all lenders, especially banks, have the same lending requirements.
  • Most lenders have overlays which are additional lending requirements that is above and beyond the minimum mortgage requirements of loan programs on government loans such as FHA, VA, USDA, and Conventional Mortgages.

What Are The Qualification Requirements On Buying A Home If My Credit Scores Are Below 600

Besides the question “Can I Buy A Home If My Credit Scores Are Below 600”, there are other common questions asked by borrowers:

  • Can I still secure a mortgage if I filed bankruptcy?
  • Can I qualify for mortgage during Chapter 13 Bankruptcy?
  • Can I qualify for FHA Loan with no waiting period after Chapter 13 Bankruptcy?
  • Can I secure a mortgage if I have a judgment on my record?
  • How about tax liens?
  • Can I qualify for a mortgage if my credit scores are in the 500’s?
  • Can I qualify for a mortgage if I had a previous foreclosure?
  • Can I qualify for a mortgage if I had a prior short sale on my credit record?

The answer to all of the above questions is YES.

  • Yes, home buyers can secure a mortgage with previous credit issue. 
  • It is a process and we will be able to help you work through it. 
  • It might take a longer time that someone with perfect credit, but you can definitely get a mortgage and we will help you. 
  • The only criteria that will disqualify you from obtaining a mortgage if borrowers do not have documented income and have not filed income taxes.

Qualifying For Home Loan With Bad Credit

Borrowers can qualify for FHA Loans with bad credit and low scores. FHA does not require borrowers to pay off outstanding collections and charge offs to qualify for FHA Loans. Here are some important points in qualify for FHA Loans with under 600 credit scores:

  • FHA requires the lowest middle credit score borrowers to qualify for 3.5% down payment loan is 580 FICO
  • Borrowers under 580 credit scores and down to 500 can qualify for FHA Loans, however, they need 10% down payment

Chances are that borrowers will not eligible for a traditional conforming mortgage such as FHA and Conventional loans.

Documented income in the mortgage industry are the following:

  • Income that borrowers have been making and will continue be making for the next three years verified by tax returns, W-2s,  1099s, and paycheck stubs
  • Pension income, social security income, lottery income, etc. are examples of documented income used by lenders
  • Lenders originate and fund loans to borrowers who have the ability to repay their loans and the best security that lenders can have is previous documented employment history and current employment status

 There are other loan programs available at The Gustan Cho Team at Nationwide Mortgage & Realty such as the following:

  • Non-QM Loans 
  • Bank Statement Loans
  • No waiting period after bankruptcy and/or foreclosure
  • Asset depletion loan program where borrowers with no income but have assets can qualify

Lender Overlays

Lender overlays are mortgage requirements implemented by individual lenders.

Here are examples of overlays:

  • Minimum credit scores required on FHA Loans are 580 for 3.5% down payment home purchase loan. Lenders may require over 620 FICO credit scores. This is called a overlay on credit scores.
  • Debt to income ratio to get an approve/eligible per Automated Underwriting System findings is 56,9%. Lenders can cap DTI at 45% to 50%. This is called overlays on DTI.

Qualifying For FHA Loan With Under 600 Credit Scores

We have a series of bad credit loans for home buyers with low credit scores even with borrowers with credit scores below 600.. Our bad credit mortgage products and poor credit repair services can move on to the road to home ownership and financial independence.

Our bad credit mortgage products and loans for bad credit can still provide you with needed cash or 100% financing for a home even if your credit has any of the following:

  • Poor Credit Scores
  • Bankruptcy
  • Previous Foreclosure
  • Previous Short Sale
  • Judgments
  • Late Payments
  • Medical Bills
  • Charge-offs

These and a host of other credit related issues can all be overcome by our loans for bad credit.  We maintain a team of highly skilled industry professionals familiar with our less-than-perfect credit services.

Contact us or apply online now so we can get you qualified for a mortgage.

Gustan Cho NMLS ID 873293

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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