Buying a home is the dream of many in America. But lack of finance restricts them from fulfilling this dream. Do you also dream the same? Then, fulfill your dream of homeownership by applying for a home loan program. As it will finance your home, it will be easy for you to buy a home.
But when you apply for a home loan, a lender check a few things, and one of the crucial ones is your credit score. As a credit score shows reflect how much creditworthy you are, a good score always works to your advantage while a bad one can make it difficult to get loan approval. There are various things that can affect your credit score, including not making the payment on time, errors in the credit report, applying for new credit, etc.
Though it is difficult to get a home loan approval with bad credit, it is not impossible. There are several lenders, who offer house loans for bad credit in Houston. But before you opt for any of the lenders, would you like to know what are the loans that they offer? Read on to know this.
- FHA loans
This is a specially designed home loan program for first-time homebuyers. This loan is insured by the Federal Housing Administration but they don’t offer the loan. It is approved and offered by the FHA-approved private lenders. But as the FHA guaranteed the loan, the eligibility criteria for getting approval is much lenient than traditional home loans. With this, one can get approval with as low as a 3.5% down payment and a 500 credit score. So, if your credit score is as bad as 500, you can apply for this loan, but in that case, you need to come with a decent down payment.
- VA loans
This mortgage loan is available through the U.S. Department of Veterans Affairs. It is also a specially designed home loan program for veterans, military service members, and their surviving spouses. The U.S. Department of Veterans Affairs only insures the loan while it is offered by the private lenders. The main aim of the loan is to help veterans purchase properties easily. Though there is no minimum credit requirement like the FHA loan, as a VA loan is guaranteed by the U.S. Department of Veterans Affairs, the credit requirement is lenient than traditional home loans. So, if you are veteran, you can opt for this loan too.
- USDA loans
Another option that you can choose is a USDA home loan. Also familiar as the USDA Rural Development Guaranteed Housing Loan Program, this loan is mainly designed for rural and suburban homebuyers with low to medium-income. One can get the loan with a zero down payment and a low credit score. But the requirement can vary from a lender to another one. So, shop around lenders and opt for the one, who is ready to approve the loan with a low credit score.
FHA, VA, and USDA are some of the home loans that one can opt for with low credit score. Check which one will be the most suitable one for you and then apply for this as early as possible.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.