Low Credit Mortgage Loan Options

Dated: September 27 2018

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Worried that a low credit score will affect your mortgage rates? Improving your credit score takes dedication and time, but it can be done. While you work on that, check out some of the loan options out there that may be a good fit for you.

FHA Mortgage

FHA loans were created by the Federal Housing Administration in 1934 to help increase home ownership. It is designed to lower the risks lenders face by insuring mortgage loans.

It is easier to qualify for this loan because it has lenient loan requirements. It offers lower rates and is not risk-based priced- meaning you can avoid paying higher rates compared with conventional loans.

Lenders are able to lower the minimum required credit score for a loan for as low as 500 with 10% down and 580 with 3.5% down.

VA home loan

This is a popular home loan option for veterans designed to help active-duty military personnel, veterans and other groups become homeowners at an affordable cost backed by the US Department of Veterans Affairs.

VA loans do not require any down payment, mortgage insurance or a minimum credit score. There is no prepayment penalty so you can sell your home any time you want to. VA loans also limit the closing costs lenders can charge. It is also assumable meaning you can transfer it in the future to any VA-eligible person.

Similar to FHA loans, VA loans does not have risk-based pricing adjustments. However, some lenders require a 580-620 or higher credit score.

USDA home loans

This is a mortgage loan option offered by the U.S Department of Agriculture to home buyers in less densely populated areas of the country. It is a 100%, no down payment mortgage program specifically designed for low-to-moderate income families. Credit score requirements is a little higher than FHA and most lenders require a 640 credit score to qualify.

You can check out the USDA map here and see eligible locations in Alaska and around the country.

For more information on these loan programs and expert advice, call us at (907) 570-6757 or 907-720-4663.

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Homes by Vanna

Vanna has called Alaska home for the past 15 years. As a mother, real estate investor and previous business owner, Vanna brings many different perspectives when working for her clients. She has been a....

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