You do not have to have an excellent credit score to get a mortgage. A lot of banks will still lend to you if you have a 640-credit score. The only problem is that even if you get a loan, you will have to pay a lot in interest.
You can get a mortgage and an FHA loan. The former is a conventional mortgage which you can get even if you have a 640 score. Some lenders will be flexible with a lower score but they will make the process a lengthy affair for you. It will need a lot of paperwork and a great deal of time.
If you go for an FHA loan, you can get away with a score of 580. The FHA will require 3.5 percent in equity. In some cases, you can even go for 550 but you will have to pay at least 10 percent in equity. So that means a 10 percent down payment for both the purchase of a home and when refinancing.
This does not mean that you are a shoo-in for a mortgage as some lenders will not want to take any risks. A bank will only take you on if it wants to take you on as a risk.
Rebuild your credit
The best way to rebuild your credit is to pay off your credit balances, make sure that any discrepancies are taken care of and dispute errors on your credit report. Once your credit score improves, you will have better chances to get a good mortgage rate.
Boston Property Management: Down Assistance
You can only get access to a payment assistance program if you have at least a 640 score. If your score is lower than that, then you are ineligible. No one wants to take a risk by helping someone with a score lower than 640.
If you have been through a foreclosure or a bankruptcy, then you will have issues getting a mortgage. There will be a three-year waiting period which is known as the seasoning period. This means you will have issues getting a mortgage. The waiting period for a bankruptcy is two years. The same applies for those who have been through a foreclosure.
Higher Debt-to-Income Ratios
The FHA will allow you to have a loan if your debt-to-income ratio is in excess of 54 percent. The caveat is that your credit score should be 640 or higher. You will have issues trying to get a loan if your score is lower than that.
We hope you liked our post “Boston Property Management: How to get a home with low credit”.