Buying a home is a huge financial step, but it’s one that can be more challenging than exciting. If your credit score isn’t in great shape, your options can be severely limited, and it can be incredibly difficult to find a home loan you qualify for.
Fortunately, you do have options if you’re looking for a home loan but have a credit score that’s less than perfect. Those with poor or weak credit scores can still qualify for a mortgage – the key is knowing where to look.
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Check out the following options, all of which offer mortgages for those with poor credit.
Did you know that the government could help you find home loans that are specifically designed for those who have difficulty purchasing a home and qualifying for traditional mortgages? These loans are called FHA loans, and they’re insured by the Federal Housing Administration.
An excellent option for both first-time homebuyers and those with poor credit, an FHA loan requires a credit score of just 580. And you won’t have to put down a down payment of 20 percent either – with an FHA loan, you can put down as little as 3.5 percent. If your credit score is between 579 and 500, you can still qualify for an FHA loan, but you’ll need to put down a 10 percent down payment.
An FHA loan does come with one caveat for borrowers with poor credit. You’ll have to pay mortgage insurance premiums. That mortgage insurance premium will protect the lender if you default on your mortgage.
In order to qualify for an FHA loan, you’ll need to meet the following requirements:
- A minimum credit score of 580 (if interested in buying a home with a 3.5 percent down payment)
- A minimum credit score of 500 (if interested in buying a home with a 10 percent down payment)
- A minimum down payment of either 3.5 percent or 10 percent, depending on your credit score
- A steady employment history, or proof that you’ve worked for the same employer for the last two years
- Be out of bankruptcy for a minimum of two years
- Be out of foreclosure for a minimum of three years
If you’ve ever served in the military, you could take advantage of a fantastic home loan option: VA loans. Also called VA home loans, these mortgages are an excellent option for former members of the U.S. Military who poor credit and can’t qualify for a traditional home loan.
VA loans are meant to help members of the military and veterans, as well as some eligible spouses of individuals in the military, own a home. VA loans are offered by private lenders like traditional mortgages – you’ll be offered a loan from a bank or mortgage company, but the loan will have different terms and possibly a lower qualification threshold.
If you’re looking to buy a home, you’ll want to consider a Purchase Loan. This is the specific type of VA home loan that’s meant for homebuyers. And you won’t need to worry about mortgage insurance premiums; the VA guarantees a portion of every VA loan, so if you default on your loan, the VA will back you.
VA home loans can be easier to qualify for than traditional mortgages, especially if you have poor credit. A VA loan doesn’t require a down payment or private mortgage insurance, and you don’t have to be a first-time homebuyer. You can potentially qualify for a more competitive interest rate and better loan terms with a VA loan, as there’s more flexibility for those with weak credit.
In order to qualify for a VA home loan, you’ll need to meet the following requirements:
- Satisfactory credit (dependent from lender to lender)
- Sufficient income
- A valid Certificate of Eligibility, which proves your military service
Angel Oak Mortgage Solutions
If you’re struggling to qualify for a traditional mortgage due to your credit score, you’ll want to consider the help of a company that’s experienced in placing potential homeowners with loans that work for their credit history and financial standing. That’s what Angel Oak Mortgage Solutions offers, and it could be the key to finding your home loan with any credit score.
Angel Oak Mortgage Solutions offers primarily non-QM mortgage solutions, with a focus on individuals who are struggling to qualify for a standard mortgage. A non-QM is a non-qualified mortgage, or a home loan that doesn’t fit the rules of the Consumer Financial Protection Bureau’s rules for Qualified Mortgages. And non-QM loans are a great option for anyone who can’t prove that they will be able to make their mortgage payment or that they have strong enough credit.
Unlike some higher-risk mortgage options for those with poor credit, the non-QM options offered by Angel Oak aren’t always high-risk or subprime loans. They’re simply loans with different terms and rates that are offered to those with a high debt ratio, blemishes on their credit reports, unstable employment history, or limited income.
In order to qualify for a loan through Angel Oak Mortgage Solutions, you’ll need to meet the following requirements:
- A credit score of at least 500
- Proof of income or assets over the last few years
- An on-time payment history (dependent on which type of program you’re interested in)
- No recent bankruptcies
- No recent foreclosures
Citadel Servicing Corporation
Those with poor credit or rocky credit histories need different options than other homebuyers, and it can be challenging to find a lender who will accept your unique financial background. Citadel Servicing Corporation cuts out the hard work and puts potential homebuyers in touch directly with lenders who can work with them. From non-prime lenders and loans to non-QM solutions to traditional mortgages, Citadel Servicing Corporation can help you find a loan that’s perfect for your credit score.
Citadel Servicing Corporation offers different loans, lenders, and services meant to help anyone become a homeowner. If you don’t have a stable work history or have assets, but no regular income, Citadel can work with you to find a lender that works with alternative incomes and options.
And non-prime and sub-prime loans aren’t the only choices those with poor or weak credit have at Citadel. This company can help those with low credit scores find loans that accept less conventional lending criteria, making it easier to qualify and secure a loan that works for you. Whether you’re trying to build your credit or recover and repair your credit score, Citadel Servicing Corporation can help you find a loan that’s fair and doable.
In order to qualify for a loan through Citadel Servicing Corporation, you’ll need to meet the following requirements:
- Bank statements (if self-employed or without tax returns)
- Proof of income or assets
- A minimum credit score of 500
- A minimum loan amount of $100,000
- Live in one of the states serviced by Citadel Servicing Corporation