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The thought of buying a house can bring a bright smile to your face. But arranging the required finance is not easy for you. What to do? A home loan program can assist you by providing financial aid. But to get approval for a home loan program, you need to have a decent credit score. What is your score? Is it not up-to-the-mark? Then, you may face difficulty in getting approval.
But you don’t need to worry. There are lenders who offer 500 credit score home loans in Houston. So, fulfilling your dream of homeownership is not impossible for you.
You can also follow these tips to get approval with a low credit score –
- Save a Decent Amount for the Down Payment
Two of the key things that mortgage lenders check before approving your loan application are your credit score for checking the creditworthiness and the down payment amount. And when your credit score is low, the down payment can save you. It is because, with a hefty down payment, you need to borrow less, so, you can get easy approval. Therefore, you should start saving as much as possible for the down payment, and if possible, apply for a down payment assistance program.
- Check the Government-Backed Programs
If you compare, you will come to know that there is a huge difference between the credit score requirement of conventional loans and the government-backed ones, like FHA, VA, and USDA. As the government-backed loans are insured by the government, they have lenient requirements. For example, you can get approval for an FHA loan with a 500 credit score. Moreover, VA and USDA loans have also a relaxed requirement. So, you should check whether you can get approval for a government-backed loan. And if eligible, you should opt for this.
- Shop for Lenders
As there is no fixed loan requirement, it changes from lenders to lenders. While some lenders deny approving a loan with a low credit score, others may consider your situation and agree to approval. But without shopping for lenders, you could not understand this. So, ask for quotes from as many lenders as you can, compare these and then go for the, who is offering the best quote.
- Prepare to Offer a Good Interest Rate
Another thing that you can do! Interest rate is the rate that you need to pay over the life of the loan. So, the lower the rate, the more you can save. But to get the lowest rate, you need to have a good credit score. When your score is low and you want to get approval, you should be ready to offer a good rate. With this, you may need to pay more, but you get approval.
Follow these tips effectively to help you get loan approval with a low credit score. So, abide by the tips and ensure approval with a 500 credit score.