Poor credit is usually caused by having late payments, maxed-out credit cards, or even having a short credit history. Applying for a loan with poor credit can be challenging, but you can still find lenders willing to help.
If you are planning on buying Fort Worth real estate but have second thoughts due to your poor credit standing, you don’t have to worry since there are loans available, given your situation.
Credit scores range from 300 to 850, and the higher the score, the greater your chances of getting approved for a loan. To qualify for a mortgage, you generally need a score of 620 or higher if you apply for a conventional loan.
Keep in mind that a 620 score doesn’t guarantee approval but it does increase your chances and it often means that your rate will be more favorable.
If your score is lower than 620, you can consider the following options:
If your credit scores aren’t that good, you can still become a homeowner with the help of the Federal Housing Administration. You can qualify for an FHA home loan in Texas with a credit score as low as 580 as long as you can put down 3.5%. If your score is between 500 to 579, it’s not impossible to qualify, but you’ll need to put down 10% in this instance.
For veterans and active-duty military members with poor credit, you can apply for a VA loan with a 0% down payment option. Some VA lenders approve loans even with a credit score of 580.
If you are looking for a home in a rural area, The U.S. Department of Agriculture backs USDA Loans which helps lower-income families become homeowners. This program also offers a 0% down payment option and allows those with a lower score to qualify.
Freddie Mac Home Possible loans are conventional loans tailored for first-time buyers who belong to the lower-income bracket. The program offers 3% down and down payment assistance programs for those who can’t afford a down payment. To get approved for a conventional home loan, your FICO credit score should be at least 620.
Are you planning to join the thousands who relocate to Fort Worth, TX but are worried about your credit scores? Why not check the list above and see which is the best fit for you.
Another strategy you can apply to make things easier is to find someone with strong credit to cosign your mortgage. If you can find someone who can take the financial risk for you, you’ll get a higher chance of approval. Be wary in this case because if things don’t work out for whatever reason, your relationship with your cosigner may be strained for life.
If you can put off the purchase of your Texas home, you’ll have time to work on improving your credit score to boost your chances of getting a loan and not having to ask someone to cosign for you.
Here are actionable steps to improve your credit score:
Have errors or inaccurate entries on your credit report corrected
Pay down existing debts
Pay bills on time and in full
Keep credit utilization below 30%
Keep your old accounts open even if you don’t use them anymore
Don’t apply for new credit in the meantime to avoid having hard inquiries into your account
Ask a Fort Worth mortgage broker how to build your credit faster and get approved for your loan.
You may be surprised at how many bad credit loan options are there in the market today. There are plenty of options out there; all you need to do is pick the one that fits you best. Bad credit shouldn’t prevent you from fulfilling your dream of buying a home in Texas.
If you are not in a rush to buy a home, you can start by building your credit to increase your chances of getting approved for a loan.
Our loan experts at Reliance Financial Group of Fort Worth, TX, can help you navigate the home buying process even with poor credit.
Reach out today for a free consultation.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 137288
www.nmlsconsumeraccess.org
3501 Rochester Rd
Troy, Michigan 48083
Phone: (248) 687-5250
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info@rfgusa.com
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