If you have a bad credit score, you may still be able to get a home loan with bad credit. Some lenders won’t work with borrowers with scores in the mid-600 range. Chances are, even if they do, you can expect to pay higher rates. However, if waiting until your score improves isn’t an option, there are some loans that can help you realize your dream of home ownership.
Types of Loans Available to Those with a Prior History of Bad Credit
USDA, FHA and VA loans are three tools that might help you get the financing you need for a home loan if you have had bad credit in the past.
- USDA Loans: A USDA loan is often looked past because many borrowers think they must live on a farm or in the country to qualify. This is not true. While there are tighter qualification restrictions, a USDA loan is great for low-income families with a less-than-stellar credit score.
With this type of loan, you can buy a home with no down payment. USDA has a minimum credit score of 620 and analyzes most credit history looking back 12 months.
- FHA Loans: The Federal Housing Administration works to expand the number of people who own homes, even if their credit isn’t perfect. Basically, the FHA insures your loan so that lenders are willing to give you a mortgage at lower rates.
With this type of loan, you can buy a home with as little as 3.5 percent down. FHA has a minimum credit score of 580 and analyzes most credit history looking back 12 or 24 months.
- VA loans: Active service members and their spouses can qualify for a loan through the Department of Veterans Affairs.
With this type of loan, a veteran can buy a home with no down payment. VA has a minimum credit score of 600 and analyzes most credit history looking back 12 months.
For more information on these and other loan types for borrowers with a prior history of bad credit, contact the Mortgage Investors Group today.
