Which Michigan Home Loans Are Best If You Have Low Credit?

Buying a home in Michigan is challenging, and having a low credit score can make it seem impossible. Don’t lose hope since approximately 16% of Americans have a low credit score. However, purchasing a home with poor credit in Michigan can still be challenging. 

Fear not, since there are various options available to borrowers with low credit. In this article, we will cover everything you need to know about how to buy a home with poor credit.

If you need help securing a loan, contact Reliance Financial Group of Michigan.

Can You Buy a House with Low Credit?

Many homebuyers have questioned whether purchasing a home with a less-than-stellar credit score is possible. Yes, you can buy a home with bad credit. Mortgage lenders don’t care much about bad credit. However, a bad credit score can impact your down payment, interest rate, and associated fees.

When buying a house with low credit, having cash on hand can be extremely helpful since it can be used for the down payment. Your poor score might only qualify for a specific loan amount. You can cover the difference with cash and purchase your dream home.

Before applying for a loan, use our Michigan mortgage calculator to determine how much home you can afford.

Best Financing Options for Borrowers with Bad Credit

Now, let's look at what the best Michigan home loan when you have poor credit you should apply for:

Conventional Loans

Conventional loans don’t have a fixed requirement for income, credit score, or down payment. However, a credit score of 620 or higher is usually required to qualify for this type of loan.

There are exceptions for this type of loan. You can still take out a conventional loan if you have a higher income than your loan amount or if it is larger than the minimum down payment.

VA Loans

Administered by the Department of Veteran Affairs, the VA Loan program’s minimum credit score requirement is 580. To qualify for a VA loan, you must be a veteran or currently serving in the armed forces. To take out a VA loan with poor credit, you must have a Certificate of Eligibility from the VA.

FHA Loans

The Federal Housing Administration backs FHA loans and might be an attractive option for first-time homebuyers since they have more lenient qualifying requirements. To qualify for an FHA loan, you must have a credit score of 500.

Final Thoughts

Don’t let your low credit stop you from buying your dream home. Various options, such as VA loans, FHA loans, and conventional loans, can help you obtain a mortgage with poor credit. With the help of a trusted lender and some effort, you can overcome these hurdles and buy your first home in Michigan.

Ready to take the next step towards homeownership? Work with Reliance Financial Group of Michigan and apply for a mortgage today.

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