Buying a home is one of the long-cherished dreams of Americans. But as purchasing it needs a hefty amount, some often stop dreaming while others prefer to opt for home loans to finance their homes. However, to get a home loan, a borrower needs to ensure a few things, and the credit score is one of the prime things of them. None but a numerical expression that ranges from 300 to 850, it represents your creditworthiness as a borrower. So, a better score equals more trustworthiness, while lower represents low trust.
However, that does not mean if you are on the lower end of that spectrum, you can’t fulfill your dream. Well, you have still hope. There are some loan programs that are specially designed for persons with low credit scores. You can choose any of the loans for buying a house with 580 credit score in Houston. Here are these –
· FHA loans
Insured by the Federal Housing Administration, it is the first-time home buyer’s home loan program. An appealing quality of this loan program is that unlike conventional loan types, FHA loans don’t carry “risk-based pricing”. It is also familiar as “loan-level pricing adjustments” (LLPA). Risk-based pricing is a fee that is assessed to applications with lower credit scores or other less-than-ideal traits. There can be some interest rate “hits” for lower credit scores but they tend to be significantly less than for conventional loans. For borrowers, it means lower credit scores don’t necessarily always come with higher interest rates. Although FHA requires a minimum 500 credit score, most lenders don’t go that low. But they accept a 580 credit score. So, you can easily opt for this loan program.
· VA home loans
These loans are popular mortgage loans offered to veterans, military officers, and their spouses. These loans do not need a down payment, not any mortgage insurance. Unlike FHA, the VA does not impose a minimum credit score requirement. But most mortgage lenders will want to see a minimum credit score of 580 before approving the loan application. Much like FHA loans, though, VA loans don’t have risk-based pricing adjustments. Homebuyers with low credit scores can get rates similar to those for higher-credit borrowers.
· USDA home loans
Many homebuyers are drawn to this type of government home loan program thanks to its zero-down payment requirement. Most lenders will check your credit history to qualify for this loan program. While some lenders ask for high credit scores, there are others who approve the loan application with even low credit score. So, it is always better to shop around and compare before choosing a lender. As with FHA and VA loans, however, USDA homeowners with a 580 credit score will be evaluated more carefully than those with a higher score.
After going through the above-mentioned details for various loan programs with low credit scores, you can easily understand that there is a possibility to buy a home. So, check the eligibility criteria and choose the loan that will be the right fit for you.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.