Buying a home is a major financial decision. In fact, for many, a home will be their largest purchase. Unless you make your purchase with cash, chances are when you go to buy a home you will be taking out a mortgage. There are a variety of lenders and loans to choose from. However, one thing that lenders look at when you apply for a mortgage is your previous financial history, especially your credit. If you don't have any credit, it can make purchasing a home very difficult. Here 's what you need to know about buying a home with no credit.
Start Building Credit Now
If you are considering buying a home in the near future but have no credit history, it's important to start building credit as soon as possible. Opening a credit card, paying utility bills, or even financing a smaller purchase can help you build up your credit and prove that you are fiscally responsible. The good news is that building up your credit doesn't take that long. It takes between three and six months of regular activity for a credit score to be calculated; however, it may take a little longer before a lender will be willing to approve your mortgage.
Save A Larger Down Payment
If you have little to no credit history, proving to a lender that you are ready to buy a home can be an uphill battle. However, there are a few ways to prove that you are serious. One thing that may tip the scales in your favor is saving up a larger down payment. Saving up a larger down payment can help convince a lender that you are responsible and ready to own your own home. If you have no credit history, bringing a down payment of 20 percent or more to the table may increase your chances of getting approved for a mortgage.
Consider FHA Loans
If you have no credit, FHA loans may be the best option for your needs. The lending requirements for FHA loans allow those with non-traditional financial situations to obtain a home loan. In order to qualify for this type of loan, you will need to have debts less than 50 percent of your total income as well as no delinquencies on your rent payments or other bills for the previous year. These loans offer a great opportunity to obtain a mortgage.
If you have no credit history, buying a home can be a challenge. However, there are a few things that you can do. Working to build your credit as soon as possible can help. Coming to the table with a larger down payment can also increase your chances of getting financing. FHA loans also offer opportunities for home ownership for those with little to no credit history. For more information, reach out to companies like SWE Homes.Share