Buying a House with 580 Credit Score

House with 580 Credit Score | Embrace-a-refreshing-lifestyle-in-birla-navya-sector

Among borrowers with low credit scores, FHA loans are extremely popular. If you are buying a home, you must have heard about this option. Because of easy eligibility requirements, you are likely to be interested. However, some pieces of information might hinder your mortgage application process. If you do not dig out the truth, you might be on the verge of losing a great financing option.

The reason behind misinformation and misconceptions about buying a house with 580 credit score in Houston is quite unknown. Nevertheless, you should look beyond the false statements. You can do your homework and find out the truth.

Amidst so many tasks (from finding a lender to a house you can actually afford), you barely have time to breathe. So, here are a few myths debunked.

Myth #1: You need to make a 20% down payment

The fact is down payments come in all sizes. Many borrowers remain under the impression that a 20% down payment is only permissible. With FHA loans, it is not completely true. Moreover, a large down payment is not compulsory. FHA loans are already popular because of small down payments – you can expect the percentage to go as low as 3.5%. The raised standard ensures less hassle with interest rates and mortgage terms. Looking at past studies, most of the buyers put down 12% of the loan value. Also, the average number of first-time buyers managed to go with 6% of the mortgage value. So, the average down payment remains somewhere between 6% and 16%.

Myth #2: FHA loans are exclusive for borrowers with poor credit

There is no argument over the fact that the FHA loan programs have the lowest credit score requirements. Not only are you able to buy a house with a credit score of 580, but you can also land a mortgage with a 500 credit score. For this reason, FHA loans are put aside as bad credit mortgages. Amid this conversation, many people forget that lenders minimum eligibility requirements. The FHA insures the loans, so private lenders can afford the relaxing guidelines. The truth is lenders check whether you have at least 500 or 580. You may have 640 or above and you can still get the mortgage.

Myth #3: FHA loans are only for single-family homes

FHA mortgage programs can help you buy various types of homes. Yes, single-family housing is the most common of the lot, but the list does not end here. If eligible, borrowers can purchase multi-family units too. In case you are planning to buy a condo, townhome, or manufactured home, go through minimum property standards. It’s best to sit down with your lender and explore your options.

In essence, buying a house with a credit score of 580 seems to be an attractive option in Houston. You can work on your credit score to find an affordable interest rate. The credit score shows whether you are a risk factor to the lender. Research well before applying for an FHA loan!