How To Buy Your First Home in Michigan With Poor Credit

Buying your first property in Michigan may be challenging, especially if you’re trying to buy a home in Michigan with a low credit score. Fortunately, there’s a way to make your home ownership dream a reality. Your poor credit score might not be as much of an obstacle as you think.

In this article, we’ll discuss buying a house in Michigan with poor credit and how to qualify for a loan and boost your FICO score faster.

Minimum Credit Score to Take Out a Mortgage

Most borrowers aren’t aware of this, but many lenders don’t have a specific minimum credit score requirement to purchase a home in Michigan. The catch-22 is a conventional loan lender can set their own requirements regarding your credit score. Government-backed mortgages such as VA loans also have credit score requirements, but they’re lower than other mortgages.

If your credit score is below 500, you’ll have a harder time getting a mortgage, and you’ll have to prioritize improving your credit score before buying a home.

Before applying for a loan, we suggest that you use a Michigan mortgage calculator to know your monthly payments.

Mortgage Options for Borrowers with Bad Credit

FHA Loans

FHA loans are guaranteed by the U.S. government and allow lenders to accept borrowers with credit scores as low as 580 with a 3.5 percent down payment or as low as 500 with a ten percent down payment. Keep in mind that you’ll be required to pay for mortgage insurance.

USDA Loans

The USDA loan is a zero-down-payment mortgage for borrowers in rural parts of the country and lower-density suburbs. USDA loans are backed by the U.S. Department of Agriculture. It requires eligible borrowers to have a minimum credit score of 580 at the time of purchase.

Conventional Loans

There isn’t a minimum requirement for FICO score, income, or down payment to qualify for a conventional mortgage. However, conventional loans' minimum credit score requirement is typically 620 or better.

Suppose you have a higher income than your loan amount or a larger minimum down payment. In that case, you’ll have an easier time qualifying for a conventional mortgage, even if your credit score is slightly lower than 620.

VA Loans

You can qualify for a VA loan if you’re an active duty service member, a veteran, or a surviving spouse. VA loans are backed by the U.S. Department of Veterans Affairs. You’re not required to make a down payment, and there are no minimum credit score requirements, although lenders have their credit standards.

Before you apply for one of these mortgage options, you should pre-approved for a home loan in Michigan.

Conclusion

Just because you have poor credit doesn’t mean you can’t attain homeownership. However, you must do additional research when shopping for a home loan.

Contact our loan officers and get a  if you want to purchase a home, even with bad credit.

 

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.