Lots of Americans want to buy Redmond WA Real Estate , but don’t think they can qualify for a home thanks to low credit , no credit, or a bad credit history . To buy real estate , buyers must have fairly good credit, but the FICO (Fair Isaac Credit) score isn’t the only factor that determines your credit worthiness to get a a home loan . If you have a credit score of at least 640, you can probably get a loan. If your FICO score is higher than 740 you will most likely qualify for the prime mortgage rates assuming you match the other lender qualifications. Loans backed by the FHA usually have less strict credit standards .
DTI Ratio
The DTI or debt to income ratio is also an important item lenders regard when underwriting mortgage loans . Banks don’t just want to see bills paid , they also want to see that you have enough income to cover the mortgage loan . A general rule of thumb is that lenders will allow a 35% total debt to income , and of that debt, 28% of it can be for the mortgage . If you don’t have much consumer debt: credit card bills , car payments , student loans, etc. you can buy a nicer home . In reality, many VA programs will allow debt to income ratios at close to 50% . Talking to a mortgage lender can give you specific details about the debt to income requirements for specific loan products .
If your debt to income ratio is too high , you will not qualify for a home loan even if you have an 800 fico credit score .
People with poor credit scores, but income , and a decent down payment can likely get a loan through sub-prime or private lenders, but they will have to pay for it. Interest rates on hard money loans are incredibly expensive .
Home buying options for buyers with bad credit scores
If you have bad credit , try to fix it as soon as possible . Credit is repaired by having debt and paying it on time, and in full all the time . It is also possible to buy Redmong Washington Real Estate with bad credit by using Rent to Own, Lease Options, and Seller Financing.
