Low Credit Score? What To Know About Getting A Mortgage
Buying a home is a major financial decision that requires a good deal of fiscal responsibility. For most, buying a home requires taking out a mortgage. There are a variety of factors that go into mortgage approvals, but credit score plays a large role in whether or not you qualify for a mortgage. Having a low credit score can make getting a mortgage incredibly difficult. Here are three things that you should know about getting a mortgage if you have a low credit score.
You Have Options
The first thing that you should be aware of if you are attempting to purchase a home and don't have a stellar credit score is that there are financing options available. With a conventional loan, you will need a credit score of at least 620. However, other loans, such as FHA loans and VA loans, have less stringent requirements. You may be able to qualify for an FHA loan with a credit score as low as 500. Those with credit scores of 580 may also be able to obtain a VA loan if they meet the qualifications for that type of loan.
Shopping Around Can Help
If you are struggling to get a home loan due to your credit score, shopping around can help. There are a variety of mortgage lending services that can help. If one lender is unwilling to approve you for a mortgage, another one may be. Lenders also look at more than just your credit score. Shopping around and talking to various lenders may also help you determine what else you can bring to the table that will help you get approved for a mortgage.
If you are looking to get a mortgage and know that your credit score will have a negative impact, there are other ways that you can increase your chances of approval. Having a debt-to-income ratio less than 43 percent can increase your chances of getting approved. Lenders may also be more willing to take a chance if you come to the table with a larger down payment. Your total income may also come into play. If you have a higher income and are seeking a modest home loan, you may be more likely to be approved even with a low credit score.
Getting a mortgage is a must for many in order to be able to purchase a home. However, if you have a low credit score, getting financing can be a major challenge. First, it's important to know what your financing options are. There are a variety of home loans that you may qualify for, some of which are more forgiving than others when it comes to credit scores. Shopping around and looking at various lenders can also help. Other factors, such as providing a larger down payment, can also increase your chances of approval.