Some say mortgage loans are hard to get without perfect credit and 20% down…
The truth is:
There are only 3 factors for qualifying for a home loan
1. Capacity to Re-pay the loan (income)
If you have a job or steady source of income, you’re off to a great start. If you’re already able to pay your rent on time each month, this could actually be easier than you might think.
2. Collateral (assets)
You rarely need a 20% down payment. In reality, many programs will work with as little as 3-5%, and in some cases, as low as 0 down. As well, closing costs can sometimes be paid by the seller or come from gifts or grants. In fact, our Pinnacle Plus program allows as low as a 5% down payment and it allows the down payment to be gifted to you by family. The credit score requirements also go down to 620.
So if you think you’re out of luck just because you don’t have a lot of cash, no worries. Chances are still good there’s a solution that may work.
Your credit is likely in good shape if you pay your bills on time and have avoided major issues like bankruptcy, foreclosure, short sales and judgments. Requirements will always vary, but there are still be reasonably flexible loan options, such as certain FHA loan programs that allow for more lenient credit requirements.
These three items are the fundamentals of mortgage lending. Exceptions will exist, but don’t be fooled into thinking the process is impossible. For those who work and pay their bills, there may not be a whole lot standing in the way of home ownership.