Which Home Loan Option if I have Credit Issues?

Which Home Loan Option if I have Credit Issues?

Many potential home buyers begin the process discouraged with their home buying prospects on account of having bad credit. Many people believe if they have bad credit they can forget about getting a mortgage and purchasing a home. Luckily, the vast majority of those people are wrong. In spite of what you may have heard regarding credit scores, there is hope for your home buying dreams. Learn about some home loan options that may work for you if you have a poor credit score below!

FHA Loans

If your credit is in rough shape, an FHA Loan may still be an option for you. FHA Loans were designed for those with low-to-moderate income that would otherwise not be qualified for a home loan because of a low credit score. Qualifying credit scores begin as low as 580. Also, FHA loans let you make a lower down payment, sometimes as low as 3.5%. There are a few qualifications for an FHA loan, however. Since FHA loans are government-insured, they require an upfront mortgage insurance premium as well as an annual mortgage insurance of the home loan amount. Also, FHA loans are capped at $424,100, unless you live in a “high-cost” area, in which case the limit is $636,150.

VA Loans

If you are an active or retired member of the US military, you are eligible for a VA loan from the Department of Veterans Affairs. These loans have reduced credit requirements and have the additional benefit of requiring no down payment or mortgage insurance. VA loans also have a fixed interest rate and are not based on the borrower’s credit score. VA Loans are an excellent source for a home loan if you have served in the military.

Conventional Fixed Loans

Most conventional loans only require a minimum credit score of 620, based on Fannie Mae and Freddie Mac guidelines. If you have a 620 credit score you will often have to pay a higher interest rate. However, if you get a 15-year fixed loan the lender will often offer an interest rate that does not factor your credit score as highly. You will instead need to meet other requirements like a higher income, higher down payments, and other factors. Essentially if you have a good salary and upfront cash, you can get around past credit issues.

Find Your Home Loan with David Jacobson – OakStar Bank

David Jacobson has the experience needed to get you a home loan – even if you have a difficult credit history. David Jacobson will be your ally in the home buying experience and will work to inform, educate, and communicate with you during the process. Contact us today to get started on your home loan process!

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