Prepare for the First Time Home Buyer Programs with Low Credit Scores before Buying


It is 2020 and many people still live in a misconception that mortgages are available only for people with high credit scores. But the home loans are not available for those who are financially stable. Borrowers who have had a history of bankruptcy and foreclosure can also find the perfect mortgage. Due to the unfavorable financial condition, your credit scores are low. But how low is actually low? The good news, you can apply for a mortgage as long as you have at least 500 FICO scores.

The first time home buyer programs with low credit scores in Houston, TX are usually backed by the government. Competitive rates and low or no down payment – many benefits of the homebuyer programs are present. Of course, the low credit score puts your loan application into jeopardy as you come across a risky borrower before the lender. Missed bill payments and hard credit inquiries are the issues behind such low credit. You can apply for FHA loans and VA loans upon meeting the eligibility criteria. But this is not adequate information to keep going. Let’s read over the following tips that can ease your journey.

Lenders review your credit scores

A credit score is only a number that represents whether your financial condition stands. Even though the credit scores differ due to various models, the lenders take the middle score. Now, the lenders assess your capacity to pay back. Just think about how your friend would react when you ask them to loan money. They might try to remember whether you paid them back the last time. Mortgage lenders prefer borrowers with excellent credit. After all these, buyers have a strong record of paying bills on time. A low credit score puts you at risk, and you might have to meet particular standards or criteria to make your portfolio risk-free.

FHA loan program is a trouble-free choice

When you have started pacing back and forth for the right choice, FHA loans come into play. Homebuyers with nontraditional credit can apply for the FHA mortgages, but they need to check a few things. For example, there must be no delinquency on payments. If there is delinquency over a month for auto insurance premiums or utility payments, you cannot get approved for the home loan. The debts cannot exceed 50% of income. Furthermore, there needs to be one month’s cash reserve after settling the down payment and loan fees.

Improve your low credit

The credit score you have is not the end of your dream. First-time buyers with low credit scores can put the final price on their dream home only if they work on improving their creditworthiness. Review your financial habits, pay bills on time, and ask help from your lender.

It is better to take time and work on FICO scores as you can manage to get the lowest interest rates. FHA loan is typically the best option for everyone, but VA loan is the best deal for veterans and active-duty service members. Don’t forget to ask the private lender which option serves you the best.


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