How to Buy a House with a Low Credit Score
Dropping mortgage rates prompt many to consider the housing market. Unfortunately, if you have poor credit, acquiring a home loan may be more challenging than you thought. Mortgage lenders prefer individuals with a prime rating. Even so, it's possible to acquire a loan with less than perfect credit. The key is selecting lenders who are prepared to work with you and educating yourself on the loan process beforehand.
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Instructions
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Contact the credit bureaus to include a statement or comment on your credit report, which basically provides a reason for bad credit such as loss of employment or temporary illness. Knowing the reason behind a low credit score may prompt lenders to approve your home loan application, as long as you meet their requirements.
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Demonstrate ability to afford the home. Keep accurate records and retain copies of your paycheck stubs, bank statements and tax returns for the past two years. If you currently rent a property, ask your landlord to provide a reference letter.
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Ask someone to co-sign the loan. Seek out someone with good credit and ask him to be a co-signer on your new home loan.
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Put down some cash. Plan ahead and have money for a down payment. The required amount depends on the lender and the type of home loan. Aim for at least 3 to 20 percent of the sale price.
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Discuss options with a broker. Find a suitable lender for a home loan with a low credit score by speaking with a mortgage broker. Certain loan products such as FHA loans don't have credit score requirements and are easier to acquire with bad credit.
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