Can I Qualify for a Home Loan with a Low Credit Score?

qualify for a home loanThe short answer is yes you can qualify for a home loan with a low credit score, but the higher the credit score the lower your interest rate on the loan will be, which will determine which programs you qualify for from a lender and what your monthly payments would be moving forward.

If you are looking to refinance a loan to get cash to finance other life events such as settling prior debts or a home remodel and have a low credit score, a lender may require that you have more equity in a home to mitigate any risks they are taking by giving you a loan. With a new mortgage loan, a bank may require at least a 10% down payment on any scores below 580. Symmes Law Group has partnered with Majestic Home Loans to offer various mortgage products including cash out refinance options and new home loans. You can complete a fast track application HERE to learn about what programs you may qualify for and get pre-approved by submitting the following information to the lender for review:

If Applying To Qualify for a Home Loan:

  • Wage Earner – Current 1 month’s Pay-stubs & W-2s for previous two years.
  • Self Employed – Personal & Business Tax Returns for the previous two years.

If Applying for a Refinance:

  • Mortgage Statement
  • Home Insurance declaration page
  • Wage Earner – Recent 1 month’s Pay-stubs & W-2s for previous two years.
  • Self Employed – Personal & Business Tax Returns for the previous two years.

Your credit scores are made up of a three-digit numbers that ranges anywhere from 300 to 850. The higher the score the better the credit. There are several calculations a lender may use obtaining your scores and most will use information from the 3 major credit bureaus, Equifax, Experian, and Trans Union. For conventional mortgages, most lenders ask that a credit score be at least 620. Those with excellent credit above 740, are typically offered slightly better interest rates and allowed to have a smaller down payment. But what if the score is below 620? What if the score is under 600 or even 580?

Scores that are sub-600 are often due to a recent event such as a recent payment delinquency, collection account or short sale. individual lenders can have their own internal credit guidelines but what that really means is if one lender says “no” that doesn’t mean the next lender will have the same answer.

If scores are in the neighborhood of 580 then adding compensating factors can help push through an approval such as a 10% down payment on the loan. Once you complete your fast track application you will be advised on what loans you may qualify for, but some examples are FHA, USDA, Conventional Loans, Jumbo Loans, FHA Streamline Refinance, VA Streamline Refinance, Cash Out Refinance or Home Equity Line of Credit to name a few. Every program comes with different guidelines and rates and how much you may have to put down for a down payment it is a new loan you are seeking.

If you have filed for bankruptcy in the past you may still qualify for a home loan, sometimes immediately. With Majestic Home Loans you would qualify for a loan after a chapter 7 bankruptcy after 2 years from your filing date on FHA, VA and conventional loans, while applying after a chapter 13 bankruptcy you would only have to wait 1 year to qualify for a loan. If no bankruptcy discharge was given in the bankruptcy case, then an applicant may qualify immediately at the time of applying for the loan.  A discharge order is issued by the bankruptcy court when you complete your case and are no longer obligated to pay back certain debts.  Sometimes a discharge order is not issued if your case was dismissed for various reasons or withheld for violating the laws of the bankruptcy code.

If you are in the market for a new home loan or home refinance be sure to complete the fast track application HERE and give Symmes Law Group a call at 206-682-7975 to get the counsel you need if you have questions or need assistance in the loan application process.  Symmes Law Group, PLLC is not a licensed loan officer or mortgage company and any qualifications and loan approvals would be subject to a particular lenders and their qualifications.

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