Can you get a mortgage with poor credit score? This has become a million-dollar question among every person with a low credit score. When you are perplexed with the thought of bad credit, you must be wondering whether buying a house is also possible. Usually, the banks or financial institutes do not allow house loans to people with a poor credit score. At such times, the private lenders come into rescue along with FHA loan, VA loan, USDA loan, or other subprime loans. If you are a first-time homebuyer with a low credit score, you should be prepared for certain things.
People make mistakes and the private lenders know how normal it is. When you make mistakes, the credit score usually goes down. Finding home loans for low credit scores in Houston, TX can be easy and convenient only when you are aware of certain secrets. For example, there only a few people know that maxing out credit card might adversely leave an effect on the credit score. The bad credit mortgages light up the ray of hope for many people on a large scale. So, go through the rest of the article to know the essential things about a home loan with low credit scores.
Maintain Steady Income for every Loan
It does not matter whether you are applying for FHA or VA loan; you need to submit proof of steady income for the past two years. The borrowers can furnish pay stubs, bank statements, or tax returns if necessary. While qualifying for the bad credit loan, you cannot make debt over 31% of the monthly income. As you factor in the mortgage, the payment cannot go over 43% of the regular income. At the time of deciding your ability to make payments, you should focus on the calculation.
Take Help of Down Payment Assistance
The down payment assistance program is available to many private lenders willing to offer low credit mortgages. With a conventional loan, you need to put down 20% of the loan amount. In the down payment assistance, you can ask a relative to offer the down payment. If this is not the case, you can expect to receive government assistance.
Know about FHA Loan Requirements
Millions of people with low credit scores are likely to find FHA loans as the most appropriate option. If you have at least 500 credit scores, you can easily qualify for the mortgage. Now, the 500 credit scores become a serious issue when you are applying for a conventional loan. Apart from securing 500-579 or more than 580, there are other things to remember. At first, you should be concerned about the payment shock. When the monthly income remains the same, the sudden jump in expense is less-convenient. Also, you should be careful about the debt. Keeping an outstanding debt for more two years is not a great idea.
There are other things that you should remember applying for a VA or an FHA loan. At that time, the private lenders can walk you through the path.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.