Instead of worrying about your low credit score, gain an in-depth knowledge about your options of getting a loan
Yes, a borrower's credit score is a significant factor in determining their ability to repay a loan? Professional lenders focus on the FICO scoring system, which ranges from 300 to 850 points. A credit score of 620 or higher is usually required for conventional loans. However, in the modern world, where it is easy to have a bad credit score, the non-traditional loans differ from the conventional ones because they can provide mortgage options with poor credit.
However, many customers with 500 credit scores are unaware of their options of home loans in Houston. It is mostly because they do not have enough knowledge about the FHA and VA loans.
FHA loans and its benefits
This is a government-backed home loan that aims to provide homeownership in the United States. Previously, you needed a large down payment and an excellent credit score to qualify for this loan. However, in recent times, the FHA loan has altered the scenario. In the event that a borrower defaults on a loan, the FHA reimburses the amount owed. It lowers the risk for lenders, allowing them to use lower qualifying guidelines.
Generally, a minimum credit score of 580 is required to qualify for this loan. But when using the FHA 203(h), Mortgage Insurance for Disaster Victims, those with credit scores of 500 or higher are eligible for 100% FHA loan financing with no down payment. Apart from that, low mortgage rates are available. The gift money can be used to finance the whole down payment. In addition, 15-year and 30-year contracts are available to help borrowers save most of the money.
VA loans and its benefits
Veterans, former service members, and surviving military spouses are eligible for VA loans, which require no down payment. The loan is designed to assist returning service members, who do not have perfect credit, in purchasing a home. The loan can be bought for the borrowers’ primary residence. A vacation home, on the other hand, is out of the possibility. The VA loan is more convenient than a conventional loan because of the lenient credit score and income requirements. Also, since the loan is backed by the government, no PMI is needed.
In order to get more in-depth information about 500 credit score home loans in Houston, get in touch with a professional before applying for it.