Home Buying in Grand Rapids>Question Details

Mersiha S., Home Buyer in Grand Rapids, MI

We have a low FICO score, is there hope in buying a home?

Asked by Mersiha S., Grand Rapids, MI Tue Aug 11, 2009

My finance and I have low FICO score (563 & 564) We are wanting to purchase a home of our own now that we had our first daughter a little bit ago. I am unemployed currently but my fiance makes about $6,000/month (gross). We are uncertain if there are programs or even banks that will even talk to us about home purchases considering how low our scores are. We are working on paying some of the debt off, we also have a car lease that we have been paying on time. In the mean time we found a home that is PERFECT for us, size, location and $$$ wise and would really like to see if we could purchase it. The home is located in MI, I don't know if that matters. If you know anyone who can help us please, please,pleaseeeee let us know. Also would a strong co-signer with let's say as score of 720 help in our case? Thank you!

ps: we are first time home buyers :)

Help the community by answering this question:


A co-signer helps in terms of income or down payment qualifying, however a high credit score from a co-signer does not offset a low credit score from the main borrower. Things that may offset a lower credit score (in combination): stable employment (over 2 years at same job), a strong pattern of savings, large downpayment (10% or more), or 6 months or more of reserves in the bank. This is of course a partial list and there are other factors that can help demonstrate strength of a borrower.

With that being said, most lenders I know of are not even considering you for an FHA loan if the middle credit score for each borrower is not at least 620. You may have some lenders out there who will consider it if you are a 600 or so, but then you are probably looking at less than favorable terms.

Work on buliding your credit scores. Speak with a credit counselor who can give you tips to manage your finances and boost those scores. Your county or city probably offers those services for free. It might not help you get into a house now, but sure enough if you work hard at it good things will come

Best of luck
3 votes Thank Flag Link Tue Aug 11, 2009
Tony-that was the straightest to the point answer I've seen from a Mortgage Broker OR Banker today! THANK YOU for taking some time to actually give some information!

Mersiha S.-This is America, do what you like. But run like the plague from anyone who says you can't buy with those scores, but hurry and call now because the $8000 Tax Credit is going away! By the way, it is UP TO $8000. Not every purchaser gets a check for $8000. That's for another topic though.

Granted, you are credit challenged with those scores. Bad things happen to good people, so it's not a judgment by any means.

FHA does not have a "FICO" requirement as alot of lenders will tell you. Sometimes it's because they just don't even realize that. However, the investor (the big guys fronting the money for the loan) have tightened up credit scores they will loan on. FHA does not have income limits, you just have to qualify for the loan. If your scores dipped due to a temporary circumstance, very often, letters of explanation can be provided to explain why it happened and what you have done to ensure you are on solid ground.

Depending on where the home you like is located, it may qualify for a USDA loan. Although in Texas, you surpass the allowable income limit. That is a determination that would have to be made by a local mortgage broker knowledgeable in USDA loans. USDA are government insured loans in rural areas to provide sustainable housing in those areas.

You need to speak with one or several mortgage brokers to determine what you can do.

I hope for great things for you and your family!
1 vote Thank Flag Link Tue Sep 8, 2009
Co-signors do help on FHA loans. You probably need to be at least a 620 but you're close. I would work on building your credit and seeing if you can get to 620.
1 vote Thank Flag Link Tue Aug 11, 2009
I cant actually obtain FHA financing for you with a minimum middle score if 580. You're soooo close. Why dont you give me a call and we can review your credit report together and determine exactly what needs to be done to get you over the 580 mark. I would recommend first taking a look at any open revolving accounts you have (ie. credit cards) and paying them down to balances below 50%. I can help you dispute any inaccurate and harmful information on your credit report as well. Also, if we cant get you over the 580 mark I have an investor with many homes for sale on land contract and lease option terms in Grand Rapids. These are nice rehabbed homes. Let's connect - TJ 616-433-7066
0 votes Thank Flag Link Tue Feb 9, 2010
Hi Mersiha,
You received some great information...now the alternative is a lease option that with an investors help allows you to put a low down payment with an option to purchase a home. This allows you time to repair your credit and have a home that meets your family needs at the same time. It won't get you the stimulus package money but it allows you to buy at a fixed price...today’s prices with a future close date when your credit allows you to convert to a conventional loan. Hope this give you an alternative to a "NO", based on your current credit situation. By the way there are thousands of people in your situation.
0 votes Thank Flag Link Thu Oct 29, 2009
Hi, Mersiha

Currently, with scores that low, even with a qualified co-signer, neither you or your wife could be on the mortgage, thereby negating the loan altogether. I'm an experienced loan officer and credit counselor with a MI based direct lender and I have helped many people in your similiar position to ultimately become homebuyers. With the government 8,000 Stimulus pkg going away by the end of November, lets take a look at your overall situation to see if we can get you into your new home in time. my toll free office number is: 800-678-6663 Ext 5154. I look forward to be of further assistance to you both.
0 votes Thank Flag Link Thu Sep 3, 2009
The financing requirements for purchasing a home have changed significantly due to the economic crisis. It is important to work with a qualified loan officer to evaluate your options and to create a path for you to move forward in achieving your goals.

A competent loan officer will take all the factors you have mentioned into consideration. As several have indicated here, the FICO score remains a critical part of this equation. If it is not possible to purchase a home, you may also consider leasing a home while you work on resolving any outstanding issues. The Grand Rapids Association of Realtors ® has recently launched a Rental MLS for homes which can be rented.

If you're interested in learning more about what's available on that database or would like to explore the possibility of a rental option for the home which has caught you eye, let us know. A well presented proposal can sometimes open up new avenues.
Web Reference: http://www.auduhomes.com
0 votes Thank Flag Link Tue Aug 11, 2009
Meet with a loan specialist to explore your options as well as how best to improve your FICO score.

Good luck
0 votes Thank Flag Link Tue Aug 11, 2009
Please refer here for detail suggestions...http://tinyurl.com/lqwtqn

The $8,000 HUD tax credit expires year end 2009 http://www.federalhousingtaxcredit.com/2009/index.html

Locate an experience local FHA lender...http://www.hud.gov/ll/code/llslcrit.cfm

Yes, FHA will consider non-occupy borrower (aka co-signer). However, you should know that a co-signer is responsible and has full oblifation of the debt he/she co-signed.

I hope the information helps.

Email: Contact@ActusPropertySolutions.com
Phone: (888) 525-0125
0 votes Thank Flag Link Tue Aug 11, 2009
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