Is it possible to get a First Time Home Buyers loan with bad credit?
I never even thought about buying a house because I have bad credit. I am fixing it at the moment, but it's taking time. My friends tell me I could get a loan for a house anyway. Is this true?
- 10 years agoBest Answer
I'm sure you could get a loan. The question is, would you want the loan you could get. First of all, your credit score regarding mortgage loans isn't the same as your credit score regarding say. . .a credit card or car loan. Mortgage companies will take your income and work history into account BIG TIME. Since homes build value over time instead of losing value, they are more willing to loan the money to someone with a lower credit score if they believe that person makes enough money to cover the payment. So your income will be a major factor in HOW MUCH you'll get loaned, but your score will affect your interest rate. If your debt is high and your income is low, you'll have a hard time getting a 100% loan. They'll want you to make a large down payment or find a house that is way under-priced so that it has instant equity. Otherwise, you'll be buying mortgage insurance, which is a huge ripoff.
There are many levels of "Bad" when it comes to credit. If you're scoring in the 400s. . .that's bad. You probably couldn't get a loan. If you're scoring in the 600s, that's not really bad and you could get a loan, but probably at a higher rate. The best way to find out is call a broker and ask then to run your credit and pre-qualify you. It's only a couple points hit on your credit score and it'll give you a good idea in a matter of a few minutes.Source(s): Worked at a bank for 2 years, bought first home through FHA first-time loan program despite bad credit
- Anonymous10 years ago
If you currently have a bank account or credit union account, make a visit to a loan officer at one of those offices. They will run your credit and take all financial info from you , then establish if they will loan you money to buy a home. You can also speak to a reputable mortgage company.
This is the first step to knowing if you are able to buy at this time.
If you are, they will then tell you how much $ they are williing to loan you. They will give you a preapproval letter stating the amount they will loan you.
Now you will be able to speak to a real estate agent and look for homes in your price range.
When you find a home and want to make an offer, your agent will submit the offer along with a deposit of 3-3.5% (of offer price) and the preapproval letter to the seller or seller's agent.Source(s): RE Agent Mi
- 10 years ago
Buying a home is a very important decision which needs time to think over and a lot of calculations done before finalizing a home. There are so many things to consider before you can actually pay for a home that you have liked. First there is the huge task of combing through all the homes possible for you to see and then arranging for mortgage. Once you have decided on which home you want to buy, you would want to look for a reliable realtor.
Your realtor will guide you through the steps of buying a home and all the necessary paper works and also contact with the mortgage lender. You may prepare a budget and see where your money is going. Accordingly you can settle on the amount to be set aside for your mortgage. This is the best way to find out how much mortgage you can afford. You would not want to buy a house that you cannot afford.
- Shaun MLv 510 years ago
I don't think that right now is the time to get a home loan, especially if your credit is less than perfect. Take this time to save and work on paying off your debt. You may be able to find someone who will get you a loan but it will probably be at a very high or variable interest rate which can really get you in the end. If you're not in a hurry, keep on like you are. No one but you knows when the time is right. Buying a home is a big deal. Take it seriously and get the best deal possible.
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- RealtoratheartLv 610 years ago
Maybe, but not likely. If you don't have a credit score above 750, most lenders won't even talk with you. But what you could consider if you have cash is a contract for deed. You should research that so you understand what it means in the form of ownership rights. You will need at least 10% as a down payment. The only way you are going to know for sure is to talk with a couple of lenders.
- KathleenLv 44 years ago
Try an FHA home loan. But you can't have too many bad or new baddies on your credit report. Try fixing your credit report and bumping your score up some.
- Genuine GuidanceLv 710 years ago
If this were 2006, your friends would be right.
Unfortunately, for you and others who have blemished credit, those days are over.
No, you will not get a loan until you have cleaned up the mess you already have, have a down payment, and have 18 to 24 mos of on time payments on the credit you do have.
- real estate guyLv 710 years ago
I would talk with a lender ASAP. Have them TELL YOU want is wrong with your credit. If there are judgements, they will need to be paid off ASAP.
There are really no first time loans, unless your state offers them. There is FHA with 3.5% down and USDA with 0% down.
- Anonymous10 years ago
Well, it could be true. It depends on you. Your income, time at your job, credit score, cost of house compared to your income etc.
If you don't check it out you'll never know. Now is the best time in 50 years to buy. Interest rates are low and property can be REALLY cheap.
- acermillLv 710 years ago
Your friends are most probably wrong. You do not indicate what your credit scores are, but you will need a bare minimum of scores in the 650 range before you will even be considered. The days of mortgage loans to risky credit are now history.