Financing in 02760>Question Details

Hardroller2ko, Home Buyer in 02760

how can i buy a house with 547 credit score,and no big down payment.?

Asked by Hardroller2ko, 02760 Wed May 4, 2011

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Hi Hardroller2ko,

Sadly....you might not be able to. FHA looks for a 620 FICO score and that would allow you to get into a home with 3.5% down. What you should do is concentrate on raising that score. Obviously you need to pay everything on time, but also open a couple small credit cards and use them responsibly. You also want to make sure that none of your credit cards/lines has more than 50% balance. These are a few things to boost your score.

I would also suggest looking at your report and make sure everything on it is correct. If not...dispute it with the 3 companies and get the wrong information removed.

I hope this helps.

Karen
1 vote Thank Flag Link Wed May 4, 2011
Loan officers and lenders that keep pushing these low credit score loans are only helping politicians continue to restrict lending, those loans do not perform!

Sub 600 credit scores should not be getting loans!

A borrower needs to demonstrate the ability to manage debt before they take on the largest debt obligation of their lives. Technically FHA does not have a FICO requirement...realistically how many sub 600 scores will or should be approved?
1 vote Thank Flag Link Wed May 4, 2011
Unfortunately that will not work. Work on credit improvement
1 vote Thank Flag Link Wed May 4, 2011
Not Possible. You need to focus on improving your credit score before you will be able to purchase a home with a loan.
1 vote Thank Flag Link Wed May 4, 2011
Hardroller...

First, be very wary of real estate agents answering mortgage questions. FHA literally has NO CREDIT SCORE MINIMUM. Those that have stated there is an FHA 620 score are WRONG and should not be answering questions with bad information. Lenders, wishing their loans to be paid back, use credit scores as a measuring tool, it is the lender that imposes score minimums. I do not know of ANY lenders in this market willing to go below 560, and if they do a loan between 560 and 620, the borrower pays a much higher interest rate.

That being said, a 547 is, plain and simple, a terrible credit score and reflects a willful lack of discipline when handling your finances and terrible credit management. There are very few lenders that would take the risk on your loan, especially combined with "no big downpayment."

I would advise you to work on your credit and save for your downpayment. Once accomplished, you can apply and get a GREAT mortgage to buy you and your family a new home. There are many good loan officers that would help you formulate a strategy today to improve your scores over some period of time, then help you get a loan when your scores recover. During the process, as your scores improve, your LO can advise you of your mortgage options as they open up with your scores moving higher. When we help a potential client improve their scores, we do not charge for our services.

Good luck, Jim
0 votes Thank Flag Link Sun May 6, 2012
FHA does not have a minimum credit score. The lending institution you go through will have their own requirements though. We take all 3 credit scores and use the middle score to determine your eligibility. That one may be higher than you think. there are also requirements for the accounts on your credit, not just the score. Do not let a million companies pull your credit score. Your score lowers up to 3 point with each pull and although it's supposed to only drop once in a 14 day period to allow you to shop, I find that is not always the case. Your lowest down payment is 3.5% which has to come from you, a gift from family, or a grant program through the city or others that are available.

There are ways to increase your credit score fairly quickly which can allow you to get approved and lower your interest rate also. A loan officer that specializes in credit analysis can help you obtain your goals faster than a credit repair company and save you a lot of money in the process. we have learned many ways to help our clients get pre-approved quickly depending on your particular situation. I would recommend going through a lender becuase a bank will not help you out with credit issues and a broker has to go through many different lenders and if they are not an actual expert in their field can hinder your results (Unless they've come recommended). no offense brokers!
0 votes Thank Flag Link Wed May 4, 2011
FHA does allow lower scores down payments higher than 3.5% but the only lenders I know that accept that program require a 560 score or better. Remember that your score reflects elements within your credit report that may cause your application to not be accepted even if there is a program for that score. If a low score is due mostly to medical collections then you're in better shape than if it was due to charge offs, credit card collections or other adverse actions such as repossessions. Even when there was no minimum credit score needed it was still difficult to finance people with very low scores due simply to the reasons the scores were low and not the scores per se.

I would be happy to look at your credit report and make suggestions or refer you to people who specialize in this but beware of "debt consolidators" who promise to pay your bills for you for a fee or eliminate debt by some legal magic. Those usually wind up costing you money and lowering your score further.

Let me know if I can be of help.

Tom
Thomas.Stevens@flagstar.com
0 votes Thank Flag Link Wed May 4, 2011
Generally, FHA looks for a minimum of a 620 FICO score, and solid work history, as well as a decent debt to income ratio. If you have everything lined up and just short on credit score, you can probably look into credit repairing.

I work with a great lender that has a program that you can follow to help raise your scores. I also suggest that you don't close out any accounts, and keep your balances less than 50%.

I hope this helps you.
0 votes Thank Flag Link Wed May 4, 2011
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