Buying a House with 580 Credit Score in Houston is the Opposite of Impossible
In the history of the mortgage industry, buying a home with bad credit has never been under scrutiny. If you are in Houston and looking for your dream house, your 580 credit score is not an issue. It seemed a legit problem since you gathered information about conventional loans. However, government-backed mortgages are functional with low credit scores (below 620). Especially, if you are a first-time homebuyer, bad credit does not become a stumbling block on your way to homeownership.
Buying a house with 580 credit score in Houston is precisely the very opposite of frustrating. The loan eligibility criteria are easy-to-meet and benefits are convenient for first-time and repeat buyers. When your credit score is between 580 and 669, you have fair credit. But you still do not make the final cut for traditional loans. Some lenders are on board with the process of offering FHA loans to the borrowers who have less-than-perfect scores. If you share the same fate, go through the following tips.
FHA Loans for Bad and Low Credit Scores
When your credit history indicates your inadequacy to pay bills on time (despite having a consistent income), lenders check other compensating factors. Your 580 credit is an effect of limited credit history, reckless buying habits, and new accounts. Although you can conquer your way to win FHA loans by meeting other requirements. Low score due to having repeatedly bad credit also assures FHA loans. According to the FHA guidelines, past financial problems do not make a risky borrower’s profile unacceptable. A borrower with a good payment record in the past may shake off the potential problems.
Options to Remember
FHA loans allow borrowers with 580; hence, it is a boon for first-time homebuyers. Despite the forgiving and flexible guidelines, everyone does not qualify for the loan program. You are choosing FHA loans because you have made bad decisions in the distant past. Of course, you can see the green signal for getting a mortgage. Other products also allow 580 credit, but you need to be ready for a larger down payment (at least 15%) instead of 3.5%. In case, you are an eligible veteran or surviving spouse, you can apply for a VA loan. This type of mortgage has zero down payments and is available for borrowers with at least 550.
Work on Your 580 Credit Score
Nobody said an excellent credit score is bad, so why not aim for big? Your 580 credit score is the pillar of unlocking greater loan benefits for various purposes. Reasons for low credit vary, and your next step is to find out the cause hampering credit. Check credit reports and FICO score; try to follow better credit habits. Look for ways to garner better credit opportunities and aim for more lucrative deals.
The process of finding the ideal mortgage only becomes easier when you gather more information on a better credit score. Improving score into an excellent range can lead to low-interest rates, more options, and low fees. So, focus on your credit and the best products will fall into your lap.