The requirements for buying a house with a 580 credit score in Houston are slightly different from conventional loans. Check out the details below.
Is it your first time applying for a loan? You might be thinking what’s all the fuss about credit scores? Well, a credit score is your credit history report that the lender or the bank takes into consideration before approving the loan. Your application for a conventional loan to a bank might get rejected if your credit score is below 700, which is a good credit score. However, banks usually prefer people with excellent credit scores, which are above 800. Even with a good credit score, you might have to pay a high-interest rate. A private lender in that case might be able to offer you a fair deal. What happens when your credit score is fair or poor? Is buying a house with a 580 credit score in Houston possible?
Yes, you can get a home loan with a low credit score of 580, but you would have to apply for government-backed loans like FHA loans, VA loans, USDA loans, and likewise. You can also apply for loans provided by private lenders who are usually lenient with the loan terms and the interest rates.
So, in this article, we will specify a few requirements that will help you buy a house via a mortgage with a low credit score.
FHA loans
Federal Housing Administration or FHA facilitates loans for people with financial constraints. The FHA loans can be only facilitated by an approved lender, so be careful while applying for the loan. It is best if you choose a local lender, that way they would be knowledgeable of the rules prevalent in Houston. FHA loans would need you to have a credit score of 580. You might get your loan application approved for an even lower credit score depending on the lender. FHA loans require a down payment of 3.5% to 10% of the purchase price.
VA loans
You can also apply for VA loans provided you are an active service person, a veteran, or spouse to one. The VA loans are facilitated by the US Department of Veteran Affairs. It demands a credit score of up to 600, with no down payment at all. That’s the biggest catch of this loan. This too has to be availed from an authorized lender. The terms of the loan are flexible as well.
Co-sign the Loan
Another way that you can get adequate funding with bad credit is if you get a family member to co-sign the loan as a guarantor of the money. It adds more credibility to your profile as a borrower.
Follow these rules for buying a house with a 580 credit score in Houston.
AUTHOR BIO: Joan Gallardo, a Senior Loan Officer with more than 18 years of experience, talks about buying a house with a 580 credit score in Houston.
