How to Buy a house without credit

Buy a house without credit
Buy a house without credit (Image:

In today's world with many people being hit with foreclosures, increased credit card fees and interest rates our credit reports are taking a serious hit. This is making it more and more difficult to finance a house through standard mortgage or banks. I am going to show you a way to do this all on your own.

Things You'll Need

  • A down payment
  • A job
  • Renting History
  • Desire to Own
  • Ability to Talk to people

Whether you buy with a bank or on your own you will need a down payment. How much you will need depends on your situation and cost of home. I recommend approximately $2000 to $5000. Save your tax refund, save whatever you can. This amount is doable for most homes within a year or two. Since you will be doing this with possibly less than perfect credit, you need to be prepared to pay a higher interest rate.

Find a home you like for sale. Once you have done this contact the owners and see if they would consider a lease purchase option. Be prepared to do this with more than one house. Some owners will say no, but amazingly some will say yes. In today's housing market, sales are low and many people are paying mortgages they cannot afford on empty property. This has opened an area of private selling with owner financing that you can take advantage of.

Prove you have a solid job history and rental history, this will show you are serious and dependable. Write up a payment plan in advance that will be beneficial to both parties. Be prepared to show the owners how you plan to repay them and in what length of time. Basically these people are trusting you to repay them and they need to be convinced. A simple Excel spreadsheet can do this as well as downloading a form from the internet. These are both free.

Once the deal is agreed upon draw up a formal document. A simple contract will be fine or you can go through a title company that specializes in these areas. The cost will be about $300 depending on where you live. Be sure to get everything notarized! You are entering a very real and valid contract. Sign the dotted line and move into your new home!

Tips & Warnings

  • Get everything notarized
  • Be prepared to pay higher interest rates
  • Be prepared to have limited negotiating power
  • Be prepared to see several homes and talk to more than one owner
  • Make sure everything is ironclad so that no one can change their mind.
  • Generally this means that you will be responsible for all taxes and insurance costs.

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