I’m looking to buy a home, but my credit score isn’t ideal. I have steady income and improving finances, yet I’m getting mixed messages about how much the score really matters. A mortgage broker in Kansas City said there are still options, but I want real experiences, not sales talk.
If you’ve bought with a lower score, what actually helped? Did income, savings, or debt-to-income weigh as much as credit? What steps made the biggest difference?
Are there mortgage options if your credit isn’t great?
byu/LeftyOne22 inRealEstate
Posted by LeftyOne22
12 Comments
You can do FHA at 580+
I’ll come back to you later today. My credit isn’t good (sub 650) and I’m applying for a loan
fha loan
Hi, just a side note. I recommend you visit r/CRedit to make sure you are certain what your actual Fico score is – a lot of people think they do but they really don’t. Just wanna spare you any surprises.
You probably have options and they probably won’t be ideal, the better options come with an excellent score, so yes – it’s important
Mine is much worse than what I thought it was. I thought it was around 680 so I applied for a mortgage because we’re moving states, come to find out when the mortgage guy called me my score was actually a 632. I still got qualified for a conventional loan, looking at a 6.375 interest rate. He said a qualifying score is a qualifying score. I’m in underwriting right now, working on getting homeowners insurance, so (depending on how not ideal your score is) it’s possible!
What’s the problem with your score?
Lack of credit history is different than bad entries.
Know the details of what’s on your report, dispute anything incorrect and clean up negative data.
A mortgage is a secured loan, so stellar credit isn’t required.
Creative finance is a solid option —also can use privatized banking pending; private lending an option too but you might eat a pretty high rate
Yes. FHA loans will work with bad credit. But it can’t be that bad, there are still standards.
I have seen some sources say that you can get a loan with a score of 500 if you have 10% down. It’s better to get to at least a score of 580, and of course higher is better.
Those numbers sometimes change so you want to talk to a mortgage broker.
Also NACA will work with people who have bad credit.
Yes credit score directly impacts your rate. However, two things you can do to improve your rate:
1) Find the smallest bank/broker you can
2) Put down a huge downpayment
Fannie / Freddie just loosened credit restrictions for conventional loans. Borrowers with scores as low as the 400s can be approved.
there are options, but they come with higher costs. Improving credit first can save serious money and stress later overall