3 Home Loans for Low Credit Scores in Houston, TX: Credit Score Requirements and More


Many of us yearn to live in their own houses. The small and cramped rented apartments are quite suffocating. When you are dreaming to decorate the place, your dreams are crushed right away. It is only possible when you can afford a new home. Of course, the journey is not going to be pleasant when you are left with a huge credit score debt. Now, why does the three-digit FICO score affect the home loan? The credit score is the only reflection of the entire financial story of debt. There are people who can go on without a financial mistake; however, this is not everyone’s reality. Numerous people with a low credit score are trying hard to secure a mortgage option for their first home. Unfortunately, the credit score is a huge obstacle. 

If you are going to apply for a conventional loan in Houston, the woeful stories will follow. The rate of rejection is going to be high only because of the poor credit score. Nevertheless, many home loan options are still open even when someone has bad credit. Most of the home loans for low credit scores in Houston, TX have a credit score under 620. Potential homebuyers might work with 500. Again, one of the loans does not consider focusing on credit score either. So, would you not like to find a loan with a poor credit score? Let us know about home loans here.

VA Home Loan 

The qualified home buyers do not pay for the down payment and it is a huge benefit for them. A conventional loan demands at least a 5% down payment, FHA loan demands 3.5% down payment. So, the convenience level regarding VA loan surpasses everything. Now, for the credit score, there is no strict requirement for credit score. Of course, the benchmark differs by the lender and the common credit score requirement is often 500. Additionally, the professional lender checks the credit history to ensure the willingness to repay. 

FHA Loan 

FHA loan is popular for benefitting the first-time homebuyers with low down payments. This type of loan is a lot different from the conventional mortgage. Here, the lowest allowable credit score can be 500 to qualify. However, you might not get the full low-down-payment benefit. People with a credit score of 500 might be stuck with a 10% down payment. If you can prove the credit score being 580 or higher, you might be eligible for a 3.5% down payment. 

 USDA Loan 

Every lender checks debts, credit history, and income while applying for a USDA mortgage. The USDA loan does not set a certain credit score requirement; however, many lenders set a limit for 500 or 620. So, the applicants need to qualify for automatic approval. The loan encourages homeownership in rural regions of the country. So, people with low-to-moderate income families in rural areas can apply. 

No matter what you are applying for, you need to get a pre-approval letter. At this time, you need a lender’s help. Of course, the lender can help you with finding mortgages for low credit scores. So, give the lender a call now!

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.