Did you know that the average sale price of a home in 2021 was $407,000?
If you want to buy a home this year, it’s not too late. However, if you’ve got a bad credit score, you may feel like all hope is lost for you. That’s not true!
In this guide, we’re going to share with you how to get approved for a mortgage with bad credit. Keep reading to learn more!
How to Get Approved For a Mortgage With Bad Credit:
According to Experian, anything under a 670 FICO score is considered “bad” credit. While this is only one of the three major credit bureaus, the average poor credit score maxes out at 669.
Bad credit and poor credit aren’t the same thing. Thankfully, there’s more than just your credit score that a lender will look at when you’re applying for a mortgage.
A lender will also take a look at how much you’ll be putting down for a down payment. In addition, they’ll take a look at how much total debt you’re in, how much money you make a year, and if you’ve got any debts that are in collections.
Keep in mind that every lender has a different list of requirements. So, if you have one lender that you’re not having success with, consider looking at a different lender.
Consider Your Loan Type
There are several types of loans you can get for a mortgage. FHA loans, conventional loans, and VA loans are all loan types to look into if you’ve got bad credit.
A conventional loan doesn’t have a minimum requirement for income, down payment, or credit score. On average, you only need a credit score of 620 or higher to qualify for a conventional loan.
With an FHA loan, you only need a 500 credit score or higher. This is a great option to look into if you’re a first-time homebuyer.
As for a VA loan, you can only qualify for this if you’re currently serving in the military or if you’re a veteran. But, you can purchase a home for $0 down and you only need a 620 credit score!
Lastly, USDA loans are backed by the government. You’ll have to buy a home in a rural area, but you don’t have to worry about putting down a down payment. Plus, you only need a 640 credit score.
Get A Co-Signer
If you can, get someone to co-sign on your mortgage loan. This will help you to qualify for a home loan (or more of a home loan). Getting a co-signer will help to increase your average credit score.
Plus, the co-signer will have their assets considered with yours, which makes your application more attractive to a lender.
Getting Approved With Bad Credit
Thankfully, learning how to get approved for a mortgage with bad credit is easy. There are a lot of opportunities in the real estate industry that can help you to get approved, even if you have a low credit score.
Want to learn more about how to increase your credit score? Come over to our website to learn more!