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First Time Home Buyers Credit

Find 1st Time Home Mortgage Loans for Bad Credit, No Credit and Good Credit

Did you know the average credit score for an applicant seeking a mortgage for the first time is closer to 630 than 700? Many people continue to rent because they do not realize that there are many 1st time home buyer loans for people with bad credit scores. Millions of Americans have stayed on the sidelines of homeownership because they have been unable to locate lenders that support first time home loans for people with poor credit. This is why FTHF rolled out this website so that renters can become homeowners with competitive tax deductible financing. If you have a credit score between 500 and 629 you still may have the credentials that some lenders will still approve when it comes to first time buyers. Even if you are a first time home buyer with no credit, this website can help you educate yourself and ultimately find mortgage lenders that specialize in credit opportunities for new house buyers.

Becoming a homeowner can be one of the most exciting and satisfying things you ever do, but for many it's also a struggle. Many are still recovering from the economic downturn, and bad credit ratings are still common throughout the country. However, it's worth noting that just because you have a bad credit rating, you can still qualify for a home loan. This is especially true for first time home owners, and there are several first time home owner loan programs for bad credit scores.

There are generally two main types of loan programs for those with bad credit – government backed ones and private ones. Those from private lending companies could be worth looking at, but be sure that you take a look at the terms and conditions carefully. Make sure you understand interest rates and other similar aspects of the loan so you don't sign something you regret. However, as long as you proceed with caution there are several lending companies that specialize in first time home buyer credit and some will work with you to help you get your loan.

Connect with Private Money, Hard Money and Government Finance Sources that Offer First Time Home Buyer Loans for People with a Bad Credit History

The first time home buyer credit score standards will vary depending upon the loan programs you are considering. In most cases, your best option will be to utilize government backed loan programs for first time home buyers. Some of these programs created for first time home buyers with poor credit include:

  • FHA Home Loans - Finally, these are the most commonly used types of bad credit home loans for first time buyers. Buying a home with bad credit is possible if you can get approved by an FHA mortgage company. While your credit score can be low, you'll need to show that you have 3 years of stable income and of good credit history. If you do, you might qualify for these bad credit loans for first time home buyers.
  • HUD Loans - By going through HUD funded housing counseling agencies, you might be able to find HUD based loans. If you are seeking bad credit low income loans, then starting with the Department of Housing Development is a great place to start. Ask these finance companies if there are any new HUD loans for bad credit.
  • Fannie Mae - FNMA continues to offer mortgages with minimal down-payment requirements for 1st time home buyers.
  • Veterans - The VA offers a strong program for first time home buyers associated with the military. They are available and could be qualified for despite a credit rating. However, they're only available to those who are active or have served in the Armed Forces in the past. Thousands of first time home buyers with bad credit have benefitted from the VA program. Getting a house loan for bad credit scores is still possible with the VA this year.
  • USDA - These loans are intended for those with low income in rural areas, and are sometimes available to those with a poor credit history. The USDA has a reputation for bad credit low income loans for home buying in non-metro regions of the country.

bad credit home buyerDepending on the bad credit first time loan you're considering, you may have a number of different qualifications you have to meet. If you can save up for a down payment it will help you even more, but you might be able to find a grant to help provide you with this as well. In general, it's in your best interests to spend time looking at multiple lenders and to really shop around to see what each one will offer you. Don't get discouraged if it seems at first as though you can't get a bad credit house loan – there are numerous options out there, and finding the right one for you might take time.

Will the New Fico Changes Help Increase Credit Scores?

Lenders and even borrowers got some big news this year with the announcement that FICO would be changing its credit scores this year. The new FICO Score 9 is a major change to the way the group calculates the credit scores of Americans, and since FICO is still the most commonly used metric by lenders, it makes sense that paying attention to these changes especially if you are a first time house buyer looking for a pre-approval or credible qualification from a mortgage lender. Getting pre-qualified for first time home buyer credit is imperative if you have damaged credit or a low score. Before scheduling the movers it is prudent that the bank or lender's underwriter has reviewed, evaluated and approved before making a serious offer on the purchase of a home.

There are a couple of big changes in FICO Score 9. The main ones are:

  • Less impact on a credit score due to unpaid medical bills. Studies have found that medical bills are the source of about half of all debt collection activity on a credit report. This change will help those bills make far less of an impact on one's credit score.
  • Debts that are resolved in collection won't continue to negatively impact a credit score. In the past, a debt that was sent to collection would impact a credit report for seven years, even if it was paid. Just the act of being sent to collection was enough to have a major impact on your scores. Now, a paid debt will be a paid debt and won't impact credit scores.

So, with these changes to FICO scores on the horizon, will it actually help increase credit scores of borrowers? The answer isn't as simple as it would seem. If you visit the FICO website and request a copy of your credit score, the odds are good that it will indeed appear to have increased. But the problem is that most home loan lenders aren't expected to regard the new FICO Score 9 with much respect.

In other words, lenders will likely continue using the old model instead of the new one. The reason is simple – the new scores essentially overlook unpaid debts, particularly medical bills. Lenders who offer first time home buyer credit will be providing more significant loans, and as such they will likely look at the older, stricter scores. Consumers cannot expect to always have access to first time home loans for people with poor credit.

In short, your credit score may go up, but only certain lenders will see that increase. Others are expected to continue using the older model for at least several years. Over time, there may eventually be a major impact on your score that all lenders will adopt. But that can take years, and during that time you could be able to repair your credit to the point where these changes won't matter anyway.

Is Credit Holding Back First Time Home Buyers?

Today's home buyers are able to take advantage of one of the strongest markets ever, with motivated sellers and a very large inventory of homes in nearly every area. That should be great news, but for many their credit score could feel like it's holding them back. But is it really? Many don't' realize just how many options are out there for credit assistance, and understanding more about your options is something that's well worth doing.

First of all, it's important to understand what low credit scores will do. Essentially, they'll restrict your ability to access prime rate loans. Prime rates refer to loans that have very good interest rates, and when you have a lower than average credit score it can mean that you have to settle for a loan that offers less-than favorable interest as well as poorer terms. But you do have other options worth considering. One that is of particular interest is from FHA as they have a strong reputation for insuring loans originated by poor credit rating mortgage lenders in all 50 states.

Here are some key points to understand about it.

  • FHA is backed by the US government instead of private insurers. That means that the government sets the rates and terms, not a private company. In an effort to encourage "fair lending", they encourage lenders to make bad credit home loans for first time home buyers. While this sounds challenging, FHA has been making it work since 1934.
  • FHA loans have much lower credit score requirements than traditional loans. It is even possible to secure a loan with a score between 580 – and sometimes with a score that's even lower. Applying for a home loan with bad credit does not guarantee you will be approved. The FHA underwriting formula seeks borrowers who have strong credentials beyond the credit report.
  • Down payment options are more relaxed as well, and generally are based on your credit score – you can secure a home with as little as 3% of the home's purchase price as a down payment.
bad credit home buyer

In short, the FHA program is one that can bring home loans for poor credit rating within reason for millions of people. And there are other options out there as well, including others backed by the use government like HUD loans or VA loans.

However, it's also important to understand that you are going to be limited by your credit score. Having a good credit score can open the door to a much wider variety of loan programs than you could access with a poor score. FHA loans are an incredible opportunity for many, but the fact remains that they are just one option, and shopping around for other loans is much more difficult when you don't have the kind of credit that is needed to really secure a great loan. The home loans with zero down payment are more difficult to achieve but they are possible when paired with a grant.

Regardless of that fact, the key thing to understand is simple – your credit score is only one factor impacting your ability to buy a home. Things like your income, time at current job, and debt to income ratio will all have an impact as well. Remember that despite the fact that your credit may restrict your number of options, you do still have some options out there available to you.

Take your time and start looking into the various options available for home buyers. You'll see that there are far more opportunities for loans than there were in the past, and that there really has never been a better time to secure a home loan – no matter your credit history.

8 Disciplines to Get Approved for a Bad Credit Home Loan

Buying a home is a dream for millions of Americans, and one of the biggest investments that you will ever make. However, for many, it's also a challenge due to their credit score. A bad credit history can make it seem like loans for a home are out of reach.

Your credit score is one of the primary factors lenders use to determine whether or not you get a home loan. And the better your score, the better your overall loan terms are likely to be as well. But what's important is that you realize that a bad credit score isn't something that makes it impossible to get a home loan.

If you're planning on buying a home, there are several disciplines you should focus on as soon as possible. Making these changes in your approach to your financial management and to loan application in general can help you improve your chances of qualifying for a bad credit home loan and getting the funds that you need.

  1. Shop For The Right Lenders – One of the biggest things to do on a regular basis is examine different lenders and loan options. You have many more options than just a single lender. Some are actually specialists in bad credit, subprime loans. As you work to build your credit and take other steps below, continue evaluating different bad credit house loans and lenders. It can help you know who to turn to when you are ready to actually apply.
  2. Establish Some Credit Accounts – Everyone knows that your bad credit will impact your overall ability to secure loans. Establishing some credit accounts, even if it's a single credit card account or a used vehicle loan, is the key to starting to build your credit history. Do so, and you will be able to begin improving your credit and working towards getting a loan.
  3. Develop A Solid Financial Pattern – One thing that is often looked at is your overall credit history and financial habits. If you can develop a habit of regularly paying your bills on time, you start to look more attractive in the eyes of a lender. Learn to set a budget and cut out frivolous purchases, and strive to get the financial health you deserve.
  4. Work To Eliminate Debt – Your credit score isn't the only thing that has an impact on your ability to get approved for a home loan. Your level of debt to income ratio matters tremendously as well, and for certain loans is one of the primary things looked at. Reducing your outstanding debt can help improve this ratio and get you the loan that you're striving towards.
  5. Get Pre-Approved – Pre-approval doesn't instantly mean that you'll get a loan. But it does give you a clear indication of what your options are and what kind of budget you're shopping with. In doing so, it lets you know what kind of additional steps you need to take to start moving towards your loan.
  6. Find The Right Realtor – Not all realtors are created equally. Some have much more experience working with subprime lenders and private money, and as a result these are better realtors to work with on your home purchase. They can often offer guidance and help that will make it easier for you to find the loan that you need, no matter your situation.
  7. Acquire References – Rent doesn't usually show up on a credit history, but it's a monthly bill that you pay regularly. As such, getting references from a landlord that you have rented from for years can help as well. Often, this statement will help show that you are reliable when it comes to paying your monthly rent and it could help you get the loan you're applying for. It doesn't always have a major impact, but some lenders will look very favorably on this.
  8. Understand Reality – Finally, be sure that you get in the right mindset for someone who is seeking a subprime loan. You aren't going to likely be able to get the lowest interest rates possible, for example, or have lenders falling over themselves to offer you money. However, as long as you're realistic and keep the rest of the steps above in mind, securing a loan is very possible for those with bad credit. It's all in how you approach things.

If you'll keep these eight disciplines in mind every day, you can start working towards a better overall financial situation and greatly improve your odds of getting a home loan. Owning a home isn't impossible, even for those who have a bad credit history. The key is making sure that you know how to go about securing a loan and what to expect from a bad credit house loan. If you'll keep those points in mind, a loan is in your future.

 


 

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