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A low credit score can create roadblocks but can’t restrict you from achieving your dream of homeownership. Generally, mortgage lenders are a little skeptical about the homebuyers with a low credit score. And so, they don’t approve conventional loans when a buyer has a low credit score.
Wondering what to do? Don’t worry! There is a way out. Government-backed loans are there at your rescue. You can apply for government-backed home loans for low credit scores in Houston, TX and get approval from the lenders. But what are these government-backed loans? Here we have listed a few for you –
- FHA Loans
Are you a first-time homebuyer or someone, who has not owned a home in the last three years and have a bad credit score? Then, an FHA home will be the perfect choice for you. Guaranteed by the Federal Housing Administration and offered by the FHA-approved lenders, these loans have lenient requirements. While traditional loans need a good credit score and at least 20% down payment for approval, you can get an FHA loan with a 3.5% down payment and a 500 credit score. Besides, you can get down payment assistance for an FHA loan. So, it will be a great home loan choice for you.
- VA loans
Are you a former member of the military or an active member of the military or a surviving spouse? Then, you can qualify for a VA loan. Like FHA loans, it is also a government-backed loan. The United States Department of Veterans Affairs insured it, while the VA lenders offer and approve it. This loan also comes with a decent interest rate, especially for a buyer with a low credit score. Besides, the down payment requirement is lenient. Opt for lenders who offer this loan and apply for it as early as possible.
- USDA loans
Another great home loan choice for a bad credit score home buyers. You can use USDA loans to buy a home in a designated rural area. However, the property does not need to be a farm. Besides, you don’t need to be a farmer or be a part of the agriculture industry. However, the loan requirements tend to involve your income, credit score, being a lawful citizen of the U.S., the condition of the home and where the property is located. When you use a USDA loan, you do not need to make any down payment and the credit score requirement is lenient. So, you can easily apply to get approval for this loan.
So, these are some of the home loan choices for low credit score borrowers. You can apply for any of these home loans. And if you can improve your credit score, you can opt for other home loans too. So, make effective steps and buy a home of your dream.