Low credit scores alone aren’t an automatic ‘no’ when you’re considering buying a home. Lenders also consider these factors.
- Large down payment (10% down or more)
- Low debt-to-income ratio
- High income
- No outstanding debt
- Large amount of cash reserves
- Significant amount of time with current employer
- Paying comparable rent payments (no payment shock)
For FHA (lender requirements vary)
Typical minimum FICO scores by mortgage type (lender requirements will vary)
- FHA Loan – 580+ credit score (500-579 score is possible)
- VA Loan – 580 – 620+ credit score
- USDA Loan – 640+ credit score
- FHA 203K Loan – 620+ credit score
- Conventional Loan – 620+ credit score
But even hearing ‘yes’ from the lender doesn’t mean the process will flow smoothly. Roll up your sleeves and prepare a buyer’s worksheet – you can request it on the CONTACT page of this site. The worksheet will help determine whether or not buying makes sense for you.
If the answer is no, sign a lease and repeat the process again in 6 months to a year, but, it’s still a good idea to check with a lender who can point out specific areas where improvement will make the biggest impact.
And if the worksheet indicates this is the right time for you to buy a home, a lender will let you know what your budget will comfortably allow and explain the documentation you’ll need to qualify and start the process.
After that, the real fun starts! Hurry! We could schedule showings for Saturday afternoon!