The desire to become a homeowner is not unique to those with stellar credit. With demand for housing at it’s highest levels in decades, some lenders have returned to offering mortgages for a wider variety of consumers, including those who have sub-par FICO scores.
Borrowers with credit scores in the low 500s can find it easier to be pre-approved through government home loan programs like FHA, VA and USDA loans. Borrowers with negative reporting on their credit history may still find lenders willing to give them a mortgage but will have to accept a higher interest rate in exchange.
Fortunately, if a borrower’s over financial status meets the lender’s standards, less weight may be placed on credit. For instance, a solid work history, appropriate debt-to-income ratio and a growing savings account can count for a lot.
Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.375 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.