If you are looking to purchase a house, having a good credit score can help. However, having a low credit score doesn’t mean you need to give up on your dream of owning a home. Here are some options that you can consider if you have a less than impressive credit score:
Credit score under 600: If your credit score is lower than 600, your best bet is to opt for an FHA loan. Keep in mind that the lower your credit score is, the more you may have to put down for the down payment.
Credit score between 600-650: In this case, your best bet is an FHA loan, a VA loan, or a U.S. Department of Agriculture loan. For conventional loans, the minimum credit requirement is 620.
Credit score between 650-750: If you have a credit score between 650 and 750, you could opt for an FHA loan or conventional loans. You could also obtain loans through Fannie Mae or Freddie Mac, which are entities that purchase mortgages from traditional lenders.
Credit score above 750: If you have a credit score above 750, you should not have any trouble getting a mortgage approved.
Poor Credit Loans Offered by Lenders
If you have a low credit score, these are some choices you can consider for a mortgage loan:
Mortgage brokers: Mortgage brokers typically work with several different lenders. While they don’t offer loans themselves, they act as a middleman between the lender and the borrower. The benefit of going through a mortgage broker is that they may be able to get you a good deal even if you have a low credit score due to their vast connections.
Banks and credit unions: When you directly approach a bank or credit union, the lender may very well cut their costs or reduce the interest rate to get your business. If you have a low credit score, you can increase your chances of being approved for a mortgage by paying a higher down payment.
Online lenders: Online lenders are a great option if you have a low credit score due to the competitive rates they offer.
The best way to get approved for a mortgage is by shopping around. Compare the credit score requirements of different lenders, interest rates, and other associated costs before you make your decision.