Many lenders have stringent qualification criteria for home loans for low credit scores in Houston, Texas, making it difficult for borrowers with poor credit to secure one. There are, however, opportunities if you’re a would-be homebuyer hunting for the right mortgage loans for poor credit. Government departments such as the Federal Housing Administration (FHA), the Veteran’s Administration (VA), and the United States Department of Agriculture (USDA) back several poor credit home loans (USDA).
Options for home loans for low credit scores in Houston, Texas:
While some lenders would offer traditional loans to those with bad credit, getting a bad credit mortgage guaranteed by a government entity is much more available. Not only do these mortgages have less collateral requirements, but they still have smaller down payment than most traditional mortgages.
There are three main government-backed lending programmes open to borrowers with poor credit who are applying for a mortgage.
Private lenders issue FHA loans, which are guaranteed by the Federal Housing Administration. You may get one with a credit score of 580 and a 3.5 percent down payment, or with a credit score of 500 and a 10% down payment. While lenders must decide whether the would-be homeowner has adequate income to repay the loan, there are no minimum income criteria.
Private lenders may also provide VA loans, but instead of the FHA, the Veterans Administration grants the credit. The VA does not have a minimum credit score provision. There’s still no need for a down payment until the house appraises for less than what you’re paying. Although living wives of servicemen and women are also eligible, you must be a service member or have a record of military service.
For would-be homebuyers, the USDA proposes two schemes. Only borrowers with small incomes who are purchasing properties in rural areas are eligible for Section 502 Direct Loans, which are made directly by the USDA. The USDA also provides loans to low-income borrowers, but the income caps on these loans made by private lenders are higher. USDA loans don’t need a down payment, have lower interest rates than traditional loans, and you can apply even though your credit isn’t stellar.
So, what are you waiting for? Get your home loan for low credit scores in Houston, Texas.