How To Get A Mortgage With Bad Credit Score?
Getting a mortgage with a bad credit score can be challenging, but it is not impossible. Here are a few steps you can take to improve your chances of getting approved for a mortgage:
- 1- Check your credit report and score: Make sure that your credit report is accurate and that there are no errors that are negatively impacting your score.
- 2 – Improve your credit score: Make an effort to pay off any outstanding debts and try to reduce your credit utilization (the amount of credit you are using compared to the amount you have available).
- 3 – Get a co-signer: Having a co-signer with a good credit score can help improve your chances of getting approved for a mortgage.
- 4 – Look into government-backed loans: FHA loans, for example, have more flexible credit requirements and may be an option for those with bad credit.
- 5 – Consider a non-traditional lender: Some non-traditional lenders may be more willing to work with borrowers with bad credit, but be aware that they may charge higher interest rates.
It’s worth noting that even with these steps, it may be difficult to get approved for a mortgage with a bad credit score, and if you are approved, the terms and interest rate may not be favorable.
What Is a Bad Credit Score for a Mortgage?
A bad credit score for a mortgage is generally considered to be below 620 on the FICO credit score scale. With a score in this range, it may be difficult to qualify for a traditional mortgage and you may have to look into alternative options such as an FHA loan or a subprime loan.
However, credit score requirements can vary among lenders and the specific type of loan you are applying for.
FHA Loan Credit Score Requirements
FHA loan credit score requirements state that a borrower must have a minimum credit score of 500 in order to be eligible for an FHA loan. However, it’s important to note that lenders can impose their own credit score requirements on top of the FHA’s minimum, so the actual minimum credit score needed may be higher than 500.
Additionally, borrowers with a credit score between 500 and 579 are required to make a 10% down payment, while borrowers with a credit score of 580 or higher can make a down payment as low as 3.5%.
1 thought on “How To Get A Mortgage With Bad Credit Score?”