If I understand correctly, you presently have no credit score from any of the three credit bureaus - correct?
And in your credit history you have a few paid collections but no open accounts - correct?
If so, an FHA insured loan is likely the way to go. You will need to find a lender who offers maunal underwrites using alternative credit. Manual underwritering is done by specially certified FHA underwriters using traditional (read "old school") decision criteria. Alternative credit means a credit profile developed from sources that do not report to the three major credit bureaus. These include accounts such as utility bills, auto insurance, rent, telephone bills... anything you pay monthly that the creditor can provide you with a 12 month history (or more) of your payment history.
FHA is designed for homebuyers with limited or no credit history, among other things. You will pay 3% down, prove stable income over the past two years, provide statements from "alternative credit" sources showing you pay your bills on time... and voila! Approval for a 30 year fixed rate loan right in line with a regular Fannie/Freddie bank loan.
Furthermore, FHA is known in the biz as a "story" loan - you will be encouraged to provide written explanations for any credit problems in the past... it's one of the few opportunities to tell your story - what happened and how you handled it - directly to an underwriter as part of the credit decision process.
Having little debt, 18+ months with the same employer, a savings account with at least $100 all help overcome the lack of a traditional credit history.
Robert A. Small
FHA Mortgage Specialist
American Mortgage, Incorporated
Toll Free (888) 270-9808
Cell (443) 417-8944
Fax (206) 350-4491
There is a solution for you. Other factors like rental history if any, employment history, current income and assests will determine whether you will qualify for a mortgage or not. You can call me to discuss further. We can discuss those other factors. I will be able to tell you if you qualify now or what you can do to qualify in the future.
Jeremy S. Hill, Mortgage Consultant
Aurora Financial Group