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Many people who have low credit scores are curious if they can still secure a home mortgage. Top Realtor® Justyna Johnson – Edina Realty in Woodbury, MN, wants you to know there are strategies available for home buyers with poor credit. Learn more below about what you can do to buy the property of your dreams when your score is less than perfect.

A Top Realtor’s Low Credit Mortgage Guide 

Background 

Your financial history will impact your mortgage loan interest rate. However, there are ways to buy a home while you work on building your credit. Whether you are a first time home buyer or your credit has decreased since your last purchase, partnering with a realty expert can help you find ways to secure a mortgage despite your score. In general, most local Realtors recommend a few basic strategies to help their clients find the right loan for their needs. 

Strategies 

Top RealtorProspective home buyers with damaged credit scores often benefit from securing Federal Housing Administration (FHA) loans, which are designed to help borrowers with a higher risk. These loans are ideal for people who earn enough to pay their mortgage but lack sufficient credit history. Buyers with a score of 580 or higher may be eligible for a 3.5% down payment, while those below 580 could be offered a loan with 10% down on the closing day. FHA recipients will also benefit from smaller down payments than conventional loans, making the option worth exploring. 

Another strategy is to pay a higher interest rate, which varies for each buyer based on risk. The lowest mortgage rates are available for borrowers with a credit score of 760 or more. Those with a score below 760 may receive approval at a higher rate. 

Finally, know that if you can illustrate that your low credit score is on the rise, you will be more desirable to lenders than someone with a stagnant number. If you are denied approval, do not give up. Instead, focus on raising your score. Working with a mortgage loan officer can help you create a plan to increase your number and apply again. 

Many home buyers worry about their credit scores. No matter what your financial situation is, do not assume you will be locked out of the market forever due to your FICO number. To discuss securing a mortgage with a top Realtor, call Justyna Johnson – Edina Realty in Washington County at (651) 501-2345. You can also text: HOME to the number above for a free and accurate online property report. If you want to browse the latest homes for sale, visit her website.

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