Bad Credit Home Loan Options

When it comes to qualifying for a home loan, bad credit doesn’t have to hold you back. While it’s important to try to make smart financial decisions to improve your credit over time, you do not have to wait to start your life until it improves.

Bad Credit Home Loans Deliver the Funding You Need

There are several poor and bad credit home loans to consider. In this week’s blog, we’ll discuss mortgage solutions for bad or poor credit, including hard money loans and subprime loans. If you would like to purchase in Orlando, Tampa, Sarasota, or nearby Florida, contact Associates Home Loan of Florida, Inc., to talk to a local lender and get started.

Nonconventional Loans for Bad Credit

There are a few routes you can take when it comes to home financing with a less-than-great credit score. Nonconventional loans are a great option for many clients because they feature low down payments and have flexible approval requirements.

FHA loans are insured through the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. This insurance encourages lenders to approve a wider range of clients, including those with bad credit. We can approve clients for FHA loans with scores as low as 580 (with 3.5% down payment) or 500 (with 10% down payment).

VA loans are insured and regulated through the U.S. Department of Veterans Affairs. The VA does not have a minimum credit score requirement, which allows lenders to approve borrowers based on their own credit requirements. Typically, we like to see clients have at least a 620 credit score for VA home loan approval.

Subprime Loans for Bad Credit

Subprime loans are another type of mortgage alternative for clients with bad or poor credit and other bad marks on their financial history. They traditionally have a higher interest rates than conventional home financing, although rates are increasingly competitive. You may be able to secure a subprime loan with a credit score lower than 660. We can determine quickly if you’re eligible for subprime lending.

Hard Money Loans

Hard money loans are not approved based on a borrower’s credit or financial worthiness, but rather on the value of a property being financed. Also known as hard equity loans, these mortgages are commonly used as temporary loans for clients who are flipping homes or until a borrower can improve his or her credit and refinance. Like subprime loans, hard money loans have higher interest rates than conventional loans, but they can provide the financing you need at the right time for the right home.

Compensating for Bad Credit

As a rule, you are more likely to secure a home loan with bad credit even if you can help compensate in other ways. Raising funds for a substantial down payment, for example, can help offset your level of risk to lenders, even with bad credit. Additionally, keeping your debt-to-income ratio as low as possible is an important factor that lenders will note when granting approval.

When you’re ready to learn more about home financing with bad credit home loans, Associates Home Loan of Florida, Inc., is here to help. Contact us to discuss mortgage solutions for purchase in Orlando, Tampa, Sarasota, or nearby Florida, and schedule a complimentary consultation.