Can i buy a house with a bad credit score?
I live in washingon state and have a credit score of about 500. Our income is good its just our past credit is bad...is it possible to buy a house with bad things still on our credit?
- JoshLv 51 decade agoBest Answer
It is still possible under certain programs but very hard. Most of the answers that say yes but you will pay more are wrong. That is the way it used to be because you were in what is know as b/c lending but now its really just not possible to use those programs because of the new credit restrictions that are being imposed. The only way that you are able to buy with a score that low is to be able to use a program that is not credit score driven but of course with this come many other qualifications. You will need to talk with a lender to see if you will be able to get anything because yes it is possible but just so you know ahead of time it will be unlikely.
- 1 decade ago
Many people have been stuck with bad credit for a long time. For such people, bad credit home loans are a real blessing. This loan gives an opportunity for such people to also own a house. Normally, when lenders dispense such loans, they ask for the credit<!--score and analyze it. However, in the case of a bad score, the lender does not ask for the credit score. So even if you have a poor credit score, you can avail this home loan without any worry. How do you choose the best deal for a home loan?
It is of utmost importance that every borrower should do a lot of research and find out who is the lender best suited to his needs. Even when you are opting for a home loan when your credit history is not good, you can look around and choose all that is best suited to your financial-->situation. You do not have to take the very first opportunity that you get only because you suffer from bad credit. If you have such an attitude and go in for a long with a high interest rate and tough repayment schedule, then only you will suffer. You may end up being not able to meet the commitment and this may worsen your financial credit score.
- Anonymous1 decade ago
Sure you can.
I'm going to assume that you have cured all your outstanding debt and your back on track to rebuilding your credit. If you still have tons of debt, you should look into paying off your debts first. Taking on another big debt isn't smart.
There are three ways to buy a house with bad credit.
1. You can buy a house using a Hard Money Lender. You'll have to come up with around 30-35% down payment and pay a high rate along with high fees, but they lend on the property, and your ability to re-pay the loan, not so much your credit. You will need to be able to refinance the property anywhere from 12-36 months, so that's why you need to start re-building your credit now.
2. There are still a couple sub-prime lenders out there and you will need to put 20-30% down and show an ability to re-pay the loan.
3. Probably the cheapest way to get into a home is to do a lease purchase or lease option. You can pay an upfront option fee of around 5% and do a lease term of 36 months. You fix your credit and at the end of the 36 months you exercise the purchase/option by refinancing the property and paying off the owner.
Those are your options, oversimplified of course, but you can do it.
Good LuckSource(s): National Lender R.E. Broker
- PatriciaLv 44 years ago
You have a few options. First I want you to realize BAD credit is used to often. You should know EXACTLY what your score is. If you have a few credit cards a couple of doctor bills and a repossession. You need to address those matters. If those outstanding accounts are stagnant they will take pennies on the dollar. Like say if you owe a bank 2100.00 and they have sold it to a collection company they would take 700 or probably less. If the owner would like to try a rent to own option thats also a possibility. A self employed person has a harder time with banks because being self employed doesnt show stability. So all they have is your credit score.
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- MarcusLv 41 decade ago
Yes, but your annual percentage rate will be higher than someone with a good credit score. Let's say the going rate is 6.25% with a FICO score of 731. With a score of 500, you may be expected to pay an interest rate as high as 8.5% or higher. My score was 731 and I was turned down by Quicken Loans AFTER I paid the $300.00 fee. This was because I was expected to pay $600.00 per month on a $55,000 loan for a home. I am now paying 12.55% on my vehicle and was told my score is too low. 731 I thought was pretty high for my area of Nebraska, but I guess It's not high enough. Good luck my friend and have a nice day.
- chatsplasLv 71 decade ago
NOT now. In a year, you should be able to do so.
1.Don't buy more home than you can EASILY afford.
2.Repair your credit. Pay all your bills on time. Pay down all your credit cards, pay double minimums, pay off higher interest cards. Eliminate extra credit cards. Reduce your credit card expenditures.
3.SAVE money for a down payment. Can't get no money down loans right now. Paying 20% down saves you from having to pay PMI every month. SAVE, save, save.
4.Budget. Question every expense as to whether it's a Need or Want. Eliminate most Wants. Reduce your spending, reduce your use of credit. Put something into your 401ks at work.
5.Plan for your future. Set goals, follow-through. Eliminate discretionary spending. You've made lots of poor choices to have such lousy credit--with a year of making good choices you can make this happen. Wanting a house will NOT make it happen. YOU can make it happen!
Having a good credit score gets you the better loans, lower interest rates, better terms, saving you money. Having a down payment gets rid of PMI and saves you money.
- Anonymous1 decade ago
You can buy a house with little or no credit but it may not be in the neighborhood you want. Could be in the worst part of town! Be careful. There are some "programs" for first time home buyers but even then, you have to have good credit. I know, I looked into it. One way to go is "rent to own". Learn more about that.
- 1 decade ago
It is harder, but you should still be able to. If you are a first time home buyer there are a lot of programs out there that are more lienent. Check out the the Acorn Loan offered through Bank of America. It is only for first time home owners and no money down is needed. They may be able to offer you a loan.
You can also go through hard money lenders or investors who usually have a home they have flipped and want to sell. They usually provide the loan for you..hence owner financed..good luck!
P.S. There are many things you can do to repair your credit score.
- Anonymous1 decade ago
FHA is a good program for first time buyers they accept up to 540 fico score with a down payment of 3% you have a little bit more to go.
pull your credit report pay off some digs in your credit.Source(s): experiance.
- godgedLv 71 decade ago
Highly unlikely unless you have significant down.
While you may find a program that doesn't take credit score into account, unless you have 20% down, you are going to need PMI, which is based on credit score. With your score, you aren't getting PMI.
The best advice I have is to fix your credit first.Source(s): Oregon Realtor