When you have little or no credit, buying a home can be challenging. However, it is not impossible. To get a home, you might have to take a few extra steps to make yourself attractive to lenders or seek alternative sources of funding. If you are lacking the credit history needed to buy a home, here is what you need to know.
What Are Your Options?
There are a few options available to help you buy a home. One possible avenue to homeownership is through the federal government. The Federal Housing Administration, or FHA, has loans available to homebuyers who can meet certain requirements. The requirements can change, so check the agency's website before applying for a loan.
Another option is to turn to a small lender who offers no credit financing for homes. The lenders might be willing to consider other factors to judge whether or not you can receive the help needed. Depending on the lender, you could find the criteria are a bit more relaxed. Check with several lenders in your area to learn the criteria so you can judge whether or not you should submit an application.
Some home sellers offer the opportunity to buy the home directly from them. Instead of applying for a loan or seeking a funding source, you would give the seller a down payment and he or she would collect payments from you until the terms of your agreement were complete.
How Can You Improve Your Chances of Approval?
Regardless of if you choose a small lender or apply for the government loan, you need to do what you can to make yourself more attractive to lenders. One of the most important steps you can take is to be consistent with your payment history. You can ask your service providers and other creditors to report your payments to credit reporting services.
For instance, you can ask your landlord to report your rent payments. The payments could help to establish that you are capable of making monthly payments without issue. If the payments are reported, it can even help improve your credit rating.
A poor credit history does not mean you have to give up on your dreams of having your own home. Talk to a real estate agent and companies like SWE Homes to explore other means of financing a home. The agent likely knows of other programs that are available in your area that could potentially help you buy a home.