Can My Fiance & I Buy a Home If I Have Bad Credit?
Getting engaged means the start of a new life with the person you love. However, your bad credit can haunt both of you if you try to purchase a home together. On the other hand, your bad credit may not necessarily keep you from being able to buy a home. It depends on how bad your credit is, what's on your credit history and whether your fiance's credit is bad as well.
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Your Credit
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While many banks won't make traditional home loans to people with credit scores below the mid 600s, you can still apply for a mortgage insured by the Federal Housing Administration. FHA loans tend to be more lenient with low credit scores. However, you won't qualify if part of the reason for your bad credit is a foreclosure that is less than three years old.
Your Partner's Credit
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If your fiance has good credit, you may be able to completely disregard your own credit history and use only his to apply for a home loan. The catch is that only his name will be on the mortgage. However, you can still ensure that your name is on the home's deed. The other drawback of this strategy is that your partner has to have enough income on his own to qualify for the mortgage.
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Alternatives
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If you are set on getting a mortgage jointly, the most obvious alternative will be to first work on your credit. Dispute outdated or erroneous items on your report, and make arrangements with debtors to pay off debt. If there is a foreclosure or repossession on your history that is accurate, you won't be able to get it deleted. However, as more time passes between now and the foreclosure or repossession, the less it will matter to creditors and the less it will impact your score.
Other Options
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A traditional mortgage is not the only way to purchase a home. Other options that will rely less on your credit include finding a hard money lender or a rent-to-own or owner-financed property. Both of these are harder to come by and may require that you have more cash in hand for a down payment, however.
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