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Is it possible to get approved for a home loan if you have the right income but a low credit score?

My husband and I currently have been renting for the last four years. We would like to buy our first home soon. We have the income to carry a mortgage however our credit score definitely has room for improvement. With the current real estate market, townhomes in our area that usually sell for at least $60,000+ than their current listing prices would make some choice properties available to us that usually would not have been within our price range. 

We would love to take advantage of the opportunity to buy now while select properties are available in our range, but we're worried that the time it would take to work on improving our credit would be longer than we'd like and that these properties will be sold before then.

Would any lender/banker even consider to finance us based on our income and rental history alone?

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January 17 2012 - Rancho Santa Margarita
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Answers (5)

Hi Jlynn949,
I think it's important to note that although for the most part lenders are abiding to the same lending guidelines, some lenders are more strict than others and may be more willing to work with your present credit situation.
As mentioned, lenders do have the means to help fix your credit score more rapidly if that's what is needed to get done to help you qualify.
My advice: Check with a couple different lender and brokers to make sure they are considering all options for you, they will be your best guide in helping to get you where you need to be to purchase your first home.
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January 18 2012
Without known your financial profile, there is not much advice we can provide.  I suggest that you contact a lender and discuss your situation.  The lender may guide you as to the easiest and fastest way to improve your credit, so that you can obtain the best possible financing terms.  Good luck!
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January 18 2012
Depending on how low the score is, you would be able to get a mortgage.  Find a mortgage person you can trust and develop a relationship.  If the answer is no, there is still time to fix the score before rates and prices increase.
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January 17 2012
Hi Jlynn949,

You are correct about trying to get into this market while prices are good and the interest rates are still favorable.

Your situation is not unusual especially with first time buyers. While it is up to each lending institution to determine your credit worthiness, I would encourage you to talk to a mortgage broker and explain your situation. They will check your credit and let you know what is available for you depending on how much cash you have to use for down payment, credit scores, debt to income ratios and other factors.

There will be a few options available including some adjustable rate mortgages which may work to get you into a home in the current market. Your mortgage professional will explain the risks of these and other types of loans and should guide you to make a good financial decision.
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January 17 2012
Do you know what your scores are and what is dragging them down? It would probably help those who can answer this question answer it.

I would add that what I am reading implies that prices and interest rates are likely to stay pretty flat at best for most of 2012. That would be enough time to do a lot of credit "fixing."
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January 17 2012
 
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