Have you put your homeownership goals on hold because you have bad credit? While buying a North County home with bad credit may be more complicated, it isn’t impossible. Your credit score is just one factor that lenders look at when deciding whether or not you qualify for a mortgage. If you’re hoping to buy a North County San Diego home with less-than-perfect credit, then here’s what you should know.
What does your credit need to be to buy a home?
It’s difficult to define “good” credit and “bad” credit when you’re buying a home. This is because there’s no specific score you need to have in order to qualify for a mortgage. Each lender sets its own requirements for conventional loans. And those loans backed by the federal government tend to be more lenient when it comes to your credit. As long as your score is at least 500, then there may be a loan out there for you.
Work on increasing your score
That being said, you should still work on increasing your credit score. The better your score is, the more likely you are to qualify for a loan, and the better terms you will get. First things first — order a copy of your credit report. Are there any mistakes? Then take the steps needed to have them removed. Mistakes can negatively impact your score, and you’ll need some time to make those corrections. Once you’ve done that, work on improving your score. Simple ways to improve your score include making all your payments on time and paying off existing debts.
Shop around for a mortgage
Many homebuyers, especially those buying for the first time, don’t realize that you can shop around for a mortgage just like you can for anything else. And the good news is, there are many loans out there that are aimed at helping first-time buyers and those with bad credit. When you’re shopping for a loan, look into those that are backed by the federal government. These include:
- FHA loans — FHA loans are backed by the FHA or Federal Housing Administration. You can often qualify for a loan with a credit score as low as 500. There are other requirements you need to meet, but this is often a good choice for those who wish they had better credit.
- VA loans — Are you a member of the military? Then you may qualify for a VA loan, which is backed by the Department of Veteran’s Affairs. It’s good to have a score of at least 580 for these loans, though they have no official minimum score requirements.
- USDA loans — If you’re planning to buy a North County home in a more rural community, then you may qualify for a USDA loan. These are backed by the United States Department of Agriculture and typically require that you have a score of at least 640.
Contact the Clark & Gilman Team today!
Are you worried about buying a North County San Diego home with bad credit? Then contact the experts at Clark & Gilman Team at 760-758-1211 or [email protected]. We’re here to help you through the entire home-buying process, no matter what your specific needs may be. Give us a call or email us today!