Home Loan With Low Credit Scores And Bad Credit

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Home Loan With Low Credit Scores And Bad Credit

This BLOG On Home Loan With Low Credit Scores And Bad Credit Was UPDATED And PUBLISHED On December 5th, 2019

what is the Home Loan With Low Credit Scores And Bad Credit

Folks thinking about purchasing a home should start getting prepared right away, even though you are thinking about purchasing a home in the future.

One of the most important factors in qualifying for a particular loan program is borrowers need to meet minimum credit score requirements:

  • FHA requires 580 credit scores for 3.5% down payment home purchase loans
  • Homebuyers can qualify for FHA Loans with under 580 credit scores with 10% down payment
  • Fannie Mae and Freddie Mac require 620 credit scores on conventional loans
  • Department Of Veteran Affairs has no credit score requirements
  • To get a mortgage approval on non-QM loans and bank statement loans for self-employed borrowers, minimum credit scores required is 620
  •  Credit scores are the determinant factor that determines what type of loan borrowers qualify for
  • To qualify for traditional Jumbo Mortgage, home buyers need a credit score of 700

In this article, we will cover and discuss qualifying for a Home Loan With Low Credit Scores And Bad Credit.

Importance Of Credit And Credit Scores

what is the Importance Of Credit And Credit Scores

Having a good credit score is important not just to see whether or not you qualify for a mortgage loan but will also determine your mortgage rates.

  • The higher the credit score, the lower the interest rates will be
  • Mortgage lenders view home buyers and homeowners with lower credit scores as higher risk borrowers
  • So they will quote a higher mortgage rate for borrowers seeking a home loan with low credit
  • This holds especially true on conventional mortgage applicants
  • There can be a 1.0% swing in interest rates from a 620 credit score borrower and a 740 credit score borrower on conventional mortgage rats
  • Same with jumbo borrowers

A jumbo borrower with a credit score of 700 may be quoted a 5.5% rate where a borrower with a 740 plus credit score may be quoted with a 4.5% interest rate:

Factors Affecting Credit Scores And How To Improve It

what are the Factors Affecting Credit Scores And How To Improve It

When applying for a mortgage, the loan officer will take a formal mortgage application or consumers can apply online.

  • The loan officer will then pull credit and review credit history and credit scores
  • The credit history is important
  • Credit history does not affect mortgage rates
  • May have an impact on whether or not a borrower qualifies

Things on credit history that will be reviewed will be prior to the bankruptcy, foreclosure, deed in lieu of foreclosure, short sale and after. Re-established credit and no late payments after bankruptcy and/or a housing event is very important.

Borrowers With A Prior Bankruptcy Or Foreclosure

who are Borrowers With A Prior Bankruptcy Or Foreclosure

Borrowers with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale could qualify for a mortgage as long as they have met the mandatory waiting period after bankruptcy and foreclosure:

  • A prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale will not affect the interest rate on a mortgage loan
  • Credit scores will affect mortgage rates on a mortgage loan
  • With a low credit score, borrowers may qualify for a mortgage loan
  • But odds are that they will get a higher mortgage rates
  • May not qualify for the type of mortgage loan program they may prefer

FHA loans are the best mortgage loan program for those seeking a home loan with low credit or bad credit.

Mortgage With Low Credit Scores

what is the Mortgage With Low Credit Scores

Having a low credit score will not disqualify borrowers for a mortgage loan.

  • I specialize in helping borrowers seeking a home loan with low credit
  • Gustan Cho Associates Mortgage Group are nationally recognized for helping borrowers qualify for home loan with bad credit especially borrowers with credit scores of under 600

Borrowers with credit scores are under 580, call us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com and we will help boost your credit scores up so you are able to qualify.

How To Boost Credit Scores To Qualify For Mortgage

How To Boost Credit Scores To Qualify For Mortgage

There are some quick fixes to boost credit scores.

  • Never pay off an old collection account or charge off
  • This is even with unpaid balances on them
  • This is because what that does is re-activate the collection account from being dormant to being active again
  • It is like having a brand new collection account being reported on the credit report
  • If you need to pay off an old collection account,  do a pay for delete on a collection account 
  • Pay for delete is a negotiation tool where consumers will pay the old collection account in lieu of the collection agency deleting collection accounts from credit report

Home Buyers can qualify for a mortgage loan with unpaid collection accounts per FHA mortgage guidelines.

Importance Of Credit Tradelines

what is the Importance Of Credit Tradelines

Another thing to note is that no credit is the same as bad credit.

  • Consumers who have never been late on any bills and have low credit scores, it may be because they do not have any active credit tradelines
  • A quick fix may be by getting 1 to 3 secured credit cards
  • Each secured credit card can easily boost credit scores over 20 FICO points

Consumers with credit cards that are maxed out, this can be hurting credit scores.  By paying down credit cards to 10% of the available credit limit should greatly improve credit scores.

Choose A Mortgage Lender Who Cares And Are Experts On Home Loan With Low Credit Scores

How Choose A Mortgage Lender Who Cares

Over 75% of our borrowers are home buyers who were told they did not qualify for a mortgage loan from a bank, credit union, or other mortgage company due to their lender overlays. Gustan Cho Associates Mortgage Group is has a national reputation of specializing in helping home buyers get approved on government and/or conventional loans with no lender overlays. Homebuyers who are looking for a home loan with low credit scores. contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response.

  • Many of these borrowers may not have qualified for a mortgage due to the lender’s overlays or quite not meet the minimum mortgage qualification requirements
  • However, everyone with a job with documented income will qualify for a home loan with low credit scores
  • It is not if they qualify but when they qualify for a mortgage loan
  • My staff and I love working with folks whose dream is to be first time home buyers
  • Or homeowners and will help them realize their dream
  • We will help our clients work on their credit and coach them on getting qualified

If credit scores are very low or have other issues in qualifying for a mortgage, we will work with borrowers no matter how long it takes to get them qualified, approved, and closed on their home loan.

When Other Lenders Say No, Contact Us To Qualify For Home Loan With Low Credit Scores

When Other Lenders Say No, Contact Us

Home Buyers who have gone to multiple mortgage lenders and were told they do not qualify for a home loan with low credit scores, we are ready to help.  I am a mortgage banker and correspondent lender with access to also broker mortgage loans. Our team of professionals specializes in helping borrowers who seek a home loan with low credit scores.  Here are some of my testimonials, click TESTIMONIALS from homebuyers who I have helped and who turned out to be my lifelong friends.  To get started on the mortgage approval process, you can click APPLY NOW FOR PRE-APPROVAL and I will get alerted via email and will start working on getting you pre-approved.  You may also call me at 262-716-8151 or visit my website at www.gustancho.com. Or email us at gcho@loancabin.com.

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