Ways to Get a Mortgage with Poor Credit
There are a few routes you can take to obtain a mortgage with a poor credit score. Research each option further if you feel it might be a good choice for your situation.
One of the most popular ways to obtain a mortgage with a less-than-perfect credit score is the Federal Housing Administration (FHA) loan. According to Forbes, “FHA loans have the second-loosest credit score requirements after VA loans and are quicker than conventional loans to offer borrowers a second chance after a bankruptcy or foreclosure.”
Typically recommended for those with scores between 500 and 620, there are two tiers regarding down payment requirements. Those applying who have a credit score of 500-579 should budget for 10% down, while a score above 580 brings that figure down to 3.5%. Also, “you will have a difficult time getting approved if your debt-to-income ratio exceeds 45%,” says Debt.org. So consider your financial state before you apply.
Only “eligible military service members, veterans and surviving spouses” can qualify for a VA loan. However, they do boast the “most generous credit score requirements.” That’s because there’s no minimum credit score at all. However, Summit Mortgage reminds that “there are fees associated with a VA Loan that you will not find with other loan programs, but ultimately a VA loan will be your most affordable option.” Check with your local VA office for more details.