Know Your Options For Home Loans For Low Credit Scores In Houston, Texas

Author : Joan Gallardo | Published On : 15 Sep 2021

Many lenders in Houston, Texas have strict quality standards for low credit score house loans, making it difficult for consumers with bad credit to obtain one. If you're a would-be purchaser looking for the best mortgage loans for bad credit, there are options. Several bad credit house loans are backed by government agencies such as the Federal Housing Administration (FHA), the Veterans Administration (VA), and the United States Department of Agriculture (USDA) (USDA).


Options for home loans for low credit scores in Houston, Texas:


While some lenders may give standard loans to people with terrible credit, obtaining a bad credit mortgage insured by the government is far more common. These mortgages not only demand less collateral, but they also require a lower down payment than most standard mortgages.


Borrowers with bad credit can apply for a mortgage through one of three government-backed lending programs.

FHA Loans

The Federal Housing Administration guarantees FHA loans, which are issued by private lenders. With a credit score of 580 and a 3.5 percent down payment, you may acquire one, or with a credit score of 500 and a 10% down payment. There are no minimum income requirements for lenders to determine if the would-be homeowner has sufficient income to repay the loan.

VA Loans

Private lenders may also provide VA loans, but the Veterans Administration, rather than the FHA, is the one that approves them. There is no requirement for a minimum credit score with the VA. A down payment isn't required until the house appraises for less than what you're paying. Although living wives of servicemen and women are eligible, you must be a service member or have a military service record to be eligible.


Even if your credit is bad, you might be able to get a VA loan via Freedom Mortgage. Your credit history will be scrutinized by the lender to see if you can afford to pay your rent, credit card payments, and other monthly commitments. Your lender will evaluate if you can meet the contractual requirements of a home loan program if you have made all of your payments on time for the previous 12 months.


To determine if you qualify, lenders will look into your wages, work history, homes, and other financial obligations. You could be qualified for a VA loan if you've had a bankruptcy or foreclosure. However, there are certain additional conditions that must be satisfied.

USDA Loans

The USDA has two options for would-be homebuyers. Section 502 Direct Loans, which are issued directly by the USDA, are only available to borrowers with low incomes who are acquiring homes in rural regions. The USDA also makes loans to low-income applicants, although the income limits for private lender loans are greater. USDA loans don't require a down payment, offer lower interest rates than typical loans, and you may apply with bad credit.


So, what are you waiting for? Get your home loan for low credit scores in Houston, Texas.