Your credit score is an important aspect of a home loan program. It is a three-digit numerical score that shows your creditworthiness. So, you need to check your credit score from the three major credit bureaus before you apply for a home loan program. While a high credit score helps you get easy approval, a low credit score can create an obstacle and make it difficult to get approval.
But it is not impossible to get home loans for low credit scores in Houston, TX. Wondering how to make it possible? Well, following these tips can help you get the loan –
- Shop around for lenders
There is no fixed requirement for a home loan program. Mortgage loan requirements vary from a lender to another one. While a lender asks for a high credit score, another one may give some relaxation. Without shopping around and comparing quotes, it would be hard for you to understand who is asking for a high credit score while others not.
So, in place of choosing the very first mortgage lender you come in contact with, ask for quotes from different lenders, compare them, and finally pick the one that will the most suitable for you.
- Look for different home loan programs
The credit requirement also varies from a home loan program to another one. While conventional loans need a decent credit score for approval, the requirement is different for FHA or VA loan programs. Insured by the Federal Housing Administration and designed for first-time homebuyers, FHA loans require a minimum 500 credit score.
VA loans that are particularly designed for veterans or military duty officers also do not have a high credit requirement. So, instead of opting for conventional home loans, you can consider these home loan programs when your credit score is low.
- Come with a high down payment
A great way to ensure a low credit home loan is to come with a decent down payment. When you come with a hefty down payment amount, you will need to borrow less. Needless to say, lenders will prefer the borrowers who want to borrow less with a low credit score over the ones who want to borrow much with a low credit score.
So, put all your efforts together to come with a decent down payment. You can ask for gift money from your dear ones or look for down payment assistance programs. All these will help you to arrange a hefty down payment for your home loan.
- Arrange a co-signer
Do you have a helpful family member or relative with a high credit score? Great. Ask him or her to work as your co-signer. A low credit homebuyer can get loan approval easily when he or she comes with a high credit score co-signer.
But keep this in mind that the person would be responsible for the repayment of the entire debt. So, be careful when convincing one to work as your co-signer.
Following these tips help you get approval for a home loan with a low credit score. So, work on the mentioned things and ensure easy approval.