Are you considering buying a house but you have bad or no credit? Luckily, there are a few different options when it comes to homeownership for those with credit issues.
To learn about what options are available to you, keep reading. Get started on the homeownership journey by finding the best solution for you with this guide.
Apply for an FHA Loan
The FHA loan is backed by the federal housing association and acts as a mortgage. It’s a loan that works to help people purchase homes when they may not be able to otherwise. This is often aimed at first-time homeowners but can apply to others in some cases.
Candidates with no credit history may be considered for the loan and lenders can look at other areas of your payment history.
Use a Co-Signer
Using a co-signer to purchase a home involves using another individual to sign your loan with you which means that they also assume responsibility for the loan. However, this does not necessarily mean that the co-signer will be making the loan payments. The agreement assumes that the co-signer agrees to make payments when or if the primary signer is not able to.
To qualify as a mortgage co-signer, one must have good credit and good credit history. Co-signing someone else’s mortgage is a huge responsibility, and it is usually done by parents and other close relatives.
Go Through the Underwriting Process
The underwriting process involves having a mortgage lender review your income, employment, debt, and other areas of your financial history to decide whether or not you qualify for a loan. Typically, one’s credit history is reviewed, but for those with no credit score, the manual underwriting process may be available in some cases. This involves going through your finance history by hand rather than using a computer-automated process.
Manual underwriting is ideal for those with no credit, as a lender can review your financial history in other ways. You can request proof of your on-time payment history by asking for proof from landlords, utility companies, insurance companies, and more to prove to lenders that you are able to pay your bills on time each month.
Offer a Large Down Payment
If you are able to afford to do so, putting down a large down payment on a home may help you with the purchase despite not having credit. A mortgage lender may be more inclined to overlook a non-existing or poor credit history if a large down payment can be made. If you’re hoping to buy a house fast, check out URB Chicago.
Buying a House With No Credit
If you have a poor or no credit history, this doesn’t make buying a house impossible. If you are hoping to buy a home despite a credit issue, consider some of these options to find one that will work best for you. Buy the home of your dreams with these alternative purchase options.
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