Credit Scores and Home Buying
Many people desire to buy Palm Beach Gardens FL Real Estate , but don’t think they can get a home thanks to low credit history , no credit, or bad credit . To a traditional mortgage loan , buyers need to have decent credit, but the FICO (Fair Isaac Credit) score is not the only factor that determines your credit worthiness to get a a home loan . If your FICO score of at least 640, you can probably get a loan. When your credit score is higher than 740 you will most likely qualify for the prime interest rates assuming you match the other loan requirements . FHA loans home loans typically have less strict credit standards .
DTI Ratio
The DTI or debt to income level is also an important factor lenders consider when approving mortgage loans . They not only want to see that you have a proven track record with paying your bills , they also want to see that you have the income to support the mortgage loan . The general rule of thumb many banks have is a 35% total debt to income , and from that debt, they will allow up to 28% for the home loan . If you don’t have much consumer debt: credit cards , car payments , student loans, etc. you can buy a nicer home . In reality, many FHA loans and other Fannie Mae and Freddie Mac programs will allow debt to income ratios at close to 50% . For exact criteria, you will have to talk with a mortgage lender about your particular home situation .
If you have too much debt , you won’t be able to buy a house even if you have an excellent credit rating .
People with low credit scores, but good income to debt ratios , and a significant down payment can likely get a mortgage loan through hard money or private lenders . Most hard money loans are in the double digit variety .
Home buying options for buyers with poor credit
If you have poor credit , you can fix it over time . Credit is restored by paying your bills consistently. Other options to purchase real estate with bad credit include: Rent to Own, Lease Options, and Seller Financing.
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