How to buy a house with bad credit and no down payment

Home ownership is an American dream. But some people do not have the opportunity to achieve this goal. Many people cannot qualify for a home loan because they have bad credit, no credit history, or little cash. However, there are ways to get a no down payment mortgage with less than perfect credit. The key is finding the right lenders and choosing the right loan program. This requires research and patience.

Raise your credit score above 600. Although some lenders offer no down payment mortgages to people with bad credit, borrowers must meet minimum requirements. Lenders rarely offer loans to people with credit scores below 600. Therefore, it is essential to request a copy of your credit report and credit score, and if necessary, take steps to raise a low score. This includes reducing your debt and paying your credit cards on time.

Contact a mortgage broker. Mortgage lenders prefer primary applicants, and some lenders do not offer no down payment home loans to people with bad credit. Mortgage brokers have relationships with several banks and mortgage companies, and will help you find a lender. Since agents work on commission, before choosing a company, ask about their fees.

Consider a rent-to-own property. If a mortgage broker can’t find you a lender, a rent-to-own agreement may be a solution. Find someone who is motivated to sell their home and propose a rent-to-own agreement. You agree to rent the property for a specified period, during which a percentage of your rental payments go toward your down payment. Once you’ve had time to improve your credit, you’ll be able to apply for a home loan and take possession of the property.

Find a guarantee for the mortgage loan. Ask a close relative to co-sign you on the home loan. If you have an excellent credit history and sufficient income, this can improve your chances of getting 100% bad credit financing.