How to Buy a Home With No Money Down & Poor Credit
It is challenging to buy a home with no money down and poor credit, but there are resources and methods available for those willing to do the research and work on improving credit scores. Borrowers with less than a 620 score are considered to have poor credit.
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Government Programs
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There are government programs to assist those with poor credit or limited income to buy a home with no money down. These programs include: VA loans for members of the armed forces that are not credit-score driven; loans backed by the Federal Housing Administration for qualified applicants; and Fannie Mae and Freddie Mac loans administered through bank lenders.
Seller Financing
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Seller financing loans can be worked out with buyers who have poor credit, if the seller is willing and motivated to sell. The seller and the buyer can negotiate the rate and terms.
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Lease-to-Own Option
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Buyers can participate in a lease-to-own option for a new home. In these agreements, the borrower agrees to lease a property on a short term basis--one to two years--and then purchase it from the seller using traditional financing. This allows a buyer with poor credit to establish a record of payment and raise enough money for a down payment.
Credit Scores
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A higher credit score will help you qualify for a mortgage, facilitating a no-money-down arrangement. Review your negative credit items and credit scores, starting at annualcreditreport.com. See if there are any mistakes that can be challenged successfully with each of the three credit bureaus.
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References
Resources
- Photo Credit new home image by hans slegers from Fotolia.com
