Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
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FHAThe U.S. Department of Housing & Urban Development's Federal Housing Administration insures mortgage loans. These loans, known as FHA loans, come with several advantages, including the fact that borrowers with decent credit scores can qualify for them with a down payment of only 3.5 percent of a home's purchase price. FHA loans also accept lower credit scores. Borrowers with scores as low as 580 can qualify for the 3.5-percent-down version of an FHA-insured loan. Borrowers with scores under 580 can still qualify for an FHA loan; they will, though, have to come up with a down payment that is 10 percent of a home's purchase price. Most mortgage lenders today are licensed to work with the FHA.
Credit RepairYour credit scores go down when you miss payments, make payments late, run up large amounts of credit card debt, declare bankruptcy or lose a home to foreclosure. If your credit history has many of these blemishes, you might struggle to obtain a mortgage loan even from a subprime lender. You can rebuild your credit, though. You have to make sure to never miss another payment or make a late payment. And you have to whittle down your revolving debt. If you can make these changes to your negative spending habits, your credit score will improve gradually but steadily. In some cases, it makes more sense for borrowers to wait until their credit scores have risen before they apply for a mortgage loan.