How to Get a Home Loan with Bad Credit?

Looking to get a home loan? 

While it is possible to qualify for a loan with a low credit score, you’ll probably get higher interest rates and tougher terms than if you had stronger credit. Ideally, you’ll want to start improving your credit before you start hunting for a loan.

There are a few tips and tricks to improve your chances of qualifying for a home loan:

• Large Down Payment: Paying off a big chunk of your loan upfront, like 25%, can increase the chances that lenders will give you a loan. But it also means you’ll need to have a lot more money to put down upfront.

1. Debt to Income Ratio: The money you bring in compared to how much you owe. The lower your debt, the better. This includes debts like loans and credit cards.

Different kinds of loans come with different pros and cons:

• Federal Housing Administration (FHA) Loans: These loans are typically more accessible, but come with mortgage insurance, which can add to the total cost.
• Conventional Loans: The typical loan. You can make yourself more attractive to lenders by committing to a large downpayment (like 25%), but you’ll have to have more money in your pocket initially.
• VA Loans: Loans for veterans and active service members. These have no official minimum required score to qualify, but as usual, the higher your score, the better. 

Need to build credit?

Kikoff is a credit-building app that can help you establish a positive payment history through their Credit Builder account. Plans start at $5 a month, and even have an Autopay feature, so you can build credit in the background. Kikoff has no credit check, hidden fees, or interest. Sign up in minutes and start building credit faster.