When it comes to buying a house, the mortgage application process can be daunting, especially if you have a credit score of 615 or less. Many lenders are hesitant to lend to individuals with lower credit scores, making it difficult to secure a mortgage loan. However, finding a lender that specializes in working with lower credit scores can make all the difference. In this article, we will explore the best mortgage lenders for individuals with credit scores of 615 and below.
1. FHA Loans
The Federal Housing Administration (FHA) offers loans specifically designed for individuals with lower credit scores. With a credit score of 615, you may be eligible for an FHA loan with a down payment as low as 3.5%. FHA loans are also known for their flexible credit score requirements, making them a popular choice for first-time homebuyers and those with lower credit scores.
2. VA Loans
If you are a veteran or active-duty servicemember, you may be eligible for a VA loan. These loans are guaranteed by the Department of Veterans Affairs and often have lower credit score requirements than traditional mortgage loans. With a credit score of 615, you may be eligible for a VA loan with no down payment required.
3. USDA Loans
The United States Department of Agriculture (USDA) offers loans for individuals looking to purchase homes in rural areas. With a credit score of 615, you may be eligible for a USDA loan with no down payment required. These loans also have flexible credit score requirements, making them a great option for those with lower credit scores.
4. Non-Traditional Lenders
If you are having difficulty finding a traditional lender willing to work with your credit score, non-traditional lenders may be a good option. These lenders often specialize in working with individuals who have lower credit scores or unique financial situations. However, it is important to do your research and make sure the lender is reputable before applying for a loan.
5. Improve Your Credit Score
While finding a lender that works with lower credit scores is important, improving your credit score can also help you secure a better mortgage loan. Some steps you can take to improve your credit score include paying bills on time, paying down debt, and checking your credit report for errors.
6. Shop Around
It is important to shop around and compare rates from multiple lenders to find the best mortgage loan for your financial situation. Be sure to compare interest rates, fees, and terms before making a decision. Working with a mortgage broker can also help you find the best loan options for your credit score.
7. Conclusion
While having a credit score of 615 or below can make it more difficult to secure a mortgage loan, there are still options available. FHA, VA, and USDA loans are great options for individuals with lower credit scores, and non-traditional lenders can also be a good choice. Improving your credit score and shopping around for the best rates and terms can also help you secure a better mortgage loan.