Excellent credit is not required to buy a home. Of course, a higher rating will qualify homebuyers for a low rate and better loan programs. Still, buying a home after bankruptcy is easy.
Although home loans following a bankruptcy discharge come with high rates, a home purchase is a great way to quickly boost a low credit rating. Here are a few tips on getting a low credit score mortgage loan.
Sub Prime Mortgage Loan Programs
There are many options available to homebuyers with a low credit rating. Credit scores below 680 do not qualify for prime home loans. Hence, these persons will need to speak with a sub prime mortgage broker or lender. Sub prime loans are intended to assist those who cannot obtain traditional mortgage financing. These lenders work with all types of people and credit situations. Furthermore, sub prime lenders have a multitude of different loan options.
Who Qualifies for a Sub Prim Mortgage Loan?
Anyone with a low credit score can get approved for a sub prime mortgage loan. However, there are certain limitations. Many lenders will not approve a mortgage loan if the borrower’s credit score is below 500. In this instance, the risks are too high. Homebuyers who fall into this group may consider improving their credit before applying for a home loan.
Having a chapter 7 bankruptcy, collection accounts, and judgments will not disqualify a buyer from obtaining a sub prime mortgage loan. Naturally, loans of this sort have higher interest rates. However, if the homebuyer maintains a good payment history, they will have the option of refinancing for a better rate in the future.
Other Loan Options Available after Bankruptcy
As mentioned, sub prime mortgage lenders offer a range of home loans for every need. Following a bankruptcy discharge, homebuyers have the option of obtaining a “no credit score home loan.” Because lenders do not offer 100% financing on these loans, buyers must be prepared to pay a 20% down payment.
Another loan option available is the zero down home loan. This loan is offered to buyers with good and bad credit. Zero down home loans include 100% financing, which is perfect for first time homebuyers and buyers with little cash savings. To qualify for a no money down home loan with bad credit, your credit score cannot fall below 580.
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Help answer the question about mortgage loan
What should be the ratio of income to mortgage loan amount to make sure I am approved?I am looking at buying a property for 180,000. This is my first home and I can put down only 5-10%. My salary is 55,000 per year and I have a small business online that generates 20,000 per year. The property is a 5 unit apartment complex with all units currently rented and producing 2380 in monthly income currently. The total costs involved in the property if I were to own it would be 2000 per month. Should I get approved for the loan?
I have good credit but I am not sure what the rule of thumb is for a mortgage loan amount and its ratio to my income. Anybody with home buying experience that can give me some insight?
http://www.deltafunding.com
Delta Financial focuses on lending to individuals who generally do not satisfy the conventional mortgage guidelines established by Fannie Mae or Freddie Mac. The Company makes loans to these borrowers primarily for debt consolidation, refinancing, education and home improvement, where cash-out/debt consolidation consists of approximately 85 percent of Delta's business.