Posted on: 30 January 2017
Many Americans dream of being able to buy a home that they can call their own. However, if you have no credit history to speak of, then getting approved for a mortgage can be a seemingly insurmountable challenge. The good news is that there are ways to go about improving your chances of buying a home regardless of your credit history.
Consider the HOPE Program
Of all the home loan options out there, the HOPE program is probably the best suited for those with no credit or poor credit. Specifically, this HUD-approved housing program allows you to get approved for a mortgage, down payment assistance, and FDIC-insured loans regardless of income or credit. Furthermore, approved applicants pay as little as 0-3% down payment on their new home. This is definitely something worth looking into if you're exploring no-credit home financing.
Look Into Finding a Co-Signer
Another potential option for getting approved for a more traditional mortgage with little to no credit history is that of finding a co-signer to sign on your loan with you. Typically, mortgage companies will allow co-signers for those who have demonstrated they are financially stable but simply don't have the credit history to be approved for a loan. Keep in mind, though, that your co-signer will need to have good credit and they will be legally tied to the loan once they sign onto it.
Highlight "Non-Traditional" Credit
Some mortgage lenders out there are specifically willing to work with people who have no credit history. Instead of using your credit to determine your eligibility for a loan, they will use "non-traditional" credit evaluations, such as professional references, rental payment history, bank statements, and other financial information to determine your eligibility. Keep in mind, however, that these lenders typically charge higher interest rates.
Save Up for a Larger Down Payment
One final option to consider is to save up for a substantial down payment on your home, which will significantly reduce the amount of money you need to have financed. Not to mention, if you're able to place a 20% or more down payment on your home, you'll enjoy instant equity and potentially be able to avoid the need for expensive Private Mortgage Insurance (PMI).
Buying a home with no credit will require a little extra effort and research on your part, but it will be worth it when you're able to sign on your first house!Share