You may think that having a low credit score means you can't buy a home, but that's not necessarily the case. Even with a credit score of 500, you can still qualify for a mortgage with an FHA loan. Working with one of the best mortgage companies Texas offers is the best way to learn about minimum credit scores and income requirements for obtaining loans. Most conventional mortgage lenders require that borrowers have a credit score of at least 620.
So, if yours is below that golden mean, it's understandable that you'd assume that getting approved for a mortgage is an impossible mission. However, this isn't necessarily true. Borrowers applying for an FHA-insured loan must have a minimum FICO score of 580. Compared to any other loan program, FHA is the easiest to get when it comes to credit.
People whose average FICO scores are below 580, but not below 500, can still qualify for an FHA-insured loan as long as they have at least 10% to deposit a down payment, but approval may require a more thorough evaluation of their creditworthiness. The Federal Housing Administration (FHA) is the largest mortgage insurer in the world and has insured more than 34 million properties since its creation in 1934. Texas Premier Mortgage is a qualified FHA lender located in The Woodlands, Texas, and operates in surrounding areas of Houston, such as Spring, TX, Conroe, Texas, as well as throughout the state of Texas. FHA mortgage insurance provides lenders with protection against losses that result from homeowners defaulting on their mortgage loans. If you're looking for a mortgage with a credit score below 620, it can be considered a “low credit” mortgage. In short, when you apply for a home loan, mortgage insurers will look at your entire financial situation, not just your credit score. Your income level will allow your lender to determine how much of the loan you qualify for for your mortgage in Texas.
However, keep in mind that the FHA requires an initial and annual mortgage insurance premium (MIP), which will add to the total cost of your loan. Changes to credit reports can take some time to be processed by the system, so improved scores may not arrive on time when you apply for a mortgage. While it's true that not everyone qualifies and your interest rate may be higher than what a “preferred mortgage borrower” would receive, you still have the same right to seek the best mortgage rates, fees, and customer service. Borrowers with fair credit may want to consider a HomeReady loan offered by Fannie Mae, the government-sponsored entity that is a major creator of the mortgage market. If you encounter problems with your credit history after applying for a home loan, it may be too late to increase your credit score. To submit a mortgage application for this type of loan, the home you are buying must be located in an eligible rural area or suburb.
Texas Premier Mortgage will help facilitate this process to ensure that all required documentation is submitted. Lenders also consider other factors when making mortgage decisions such as the loan-to-value (LTV) and debt-to-income (DTI) ratio, your income level and the amount of money you plan to deposit. In conclusion, it is possible to get approved for a mortgage even if you have bad credit or low credit scores. The key is to work with one of the best mortgage companies Texas offers and understand all of the requirements and options available to you. With some research and preparation on your part, you can find an affordable loan option that meets your needs.
