In many ways, your credit score is like your financial “report card.” And, if you’ve gotten “good grades” throughout the years, you are typically rewarded with lower interest rates on loans, and the ability to qualify for credit, vehicle loans, and mortgages.
But what if your grades haven’t been so good, and you’re more of a C student?
The good news is that you may still be able to qualify for a home loan with bad credit. In doing so, though, you may be required to do a bit of “extra credit” projects by way of researching several lenders and providing some additional paperwork.
One option that home buyers with low credit have is to go the route of an FHA loan. While many lenders require you to have a credit score of at least 620, the Federal Housing Administration will consider borrowers who have credit scores that are more in the 500 range.
Because FHA home loans are insured, they can be less risky for the lender, which is why many borrowers who have lower credit scores may be able to qualify – and they can typically choose from a myriad of different options.
For instance, with an FHA home loan, you can opt for either a 15- or a 30-year term. There is typically also the option of going with either a fixed or an adjustable rate loan – based on what works the best for you.
In addition, while many of the more conventional mortgage lenders prefer that home buyers put at least 20% down, an FHA mortgage allows you the option of putting just 10% down – provided that your credit score falls somewhere between 500 and 579. And, if your score is at 580 or above, you may even choose to secure the loan with only a 3.5% down payment.
If you’re looking for that perfect new home in Bakersfield or the surrounding area, we can help. We’ll work with you in narrowing down your choices, based on the location you desire, and the type of residence that fits your needs the best.