A credit score is one of the most vital things that mortgage lenders consider along with down payment before approving a loan application of a homebuyer. It is nothing but a three-digit numerical number that refers to your creditworthiness as a buyer. The higher the score the better creditworthy you will be as a homebuyer. And this is why; it can be difficult for you to get the loan approval if your credit score is not up-to-the-mark.
However, it is not impossible to get loan approval with a 580 credit score or a score that is around it. It is because there are lenders, who can help you in buying a house with 580 credit score in Houston. Are you still not convinced? To clear your doubts and help you make a wise decision, here, we have listed down a few home loan programs that you can apply for with a 580 credit score.
Mainly designed for first-time homebuyers, FHA is a home loan that one can get with a low credit score. This loan is guaranteed by the Federal Housing Administration but not offered by them. The FHA-approved lenders offer and approve this loan application. The minimum credit score required for this loan is 500. As FHA loan is insured and so, less risk is involved to it, lenders approve the loan even with low credit. So, with a 580 credit score, you can easily apply for the loan and make sure approval.
It is another loan that homebuyers apply for when they have a low credit score. But as the loan is mainly for military officers, veterans, and their surviving spouses, if you don’t belong to any of the categories, you can’t apply for the loan. Established by the United States Department of Veterans Affairs, there is no fixed credit score like the FHA loan. But as the loan is insured, even if the borrower defaults, the lenders don’t need to worry much. It is because the United States Department of Veterans Affairs insures the loan. And for this, one can get the loan approval even with a low credit score.
It is another loan that one can apply for a low credit score. These loans are backed by the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program. Available to low-to-moderate income group home buyers, this loan offers 100% financing with reduced mortgage insurance premiums, and feature below-market mortgage rates. As the loan is insured, one can easily get approval with a low credit score. So, it is also good for you to go.
You can apply for an FHA loan, or a VA or USDA loan with a low credit score. And if you take some steps to improve your credit score, you will have many more options. So, start working on your credit score to get approval easily. Your dream of homeownership is not far away from you.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.