Buying a House With Imperfect Credit

If you’re tired of paying rent when you could just as well be paying for your own home, but you are concerned about imperfect credit, this message is for you.

Be encouraged, perfect credit is not required to become a home owner!

The Federal Housing Administration has a loan program for good people who fell on hard times in the past. Or made mistakes in the past. Or who have a debt ratio a little too high to qualify for a conventional bank loan. Here are the facts.

Seven Quick Facts About the FHA Loan

  1. Down payment required is 3.5% of the purchase price. On a $350,000 home, that would be $12,250. The down payment can be a gift from family, from your own funds, or from a down payment assistance program offered by your state. (Each state has their down DPA protrams.)

2. FHA does not require a certain credit score. Many lenders go down to a 600 score. Some down to 580. Some lower. The best way to find those lenders is to go to a local mortgage broker who can shop 30 lenders for you.

3. You can get a FHA loan 24 months after a Chapter 7 has been discharged. For a Chapter 13, there is no waiting period after the discharge as long as payments were made to the court on time.

4. You can ignore medical collections.

5. Non-medical collections up to a total of $2,000 can be ignored.

6. Open collections or judgments where you have a monthly payment plan, and have been paying on time for six months, is okay for getting an FHA loan.

7. The Seller can pay some or all of your closing costs.

If this all sounds encouraging, but you aren’t quite there yet, don’t be discouraged. Get your copy of the self-help credit repair book that explains how you can Repair Your Credit Like the Pros.

Knowledge is power and power brings success. Get started now, and who knows, you might be opening the door to YOUR OWN HOME (!) before the summer is over.

(Many thanks to a book reader for sending this photo.)

Remember these two rules: (1) Get preapproved for financing before house shopping. (2) Get a professional real estate agent to represent you, as the buyer.

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