Credit Scores

Many people desire to buy Baltimore MD Homes , but don’t think they can get a mortgage loan thanks to poor credit history , non existent credit, or a bad credit history . To a traditional mortgage loan , you need to have fairly good credit, but the FICO (Fair Isaac Credit) score is not the only factor that determines your credit worthiness to get a mortgage loan . If your FICO score of a minimum of 640, you are a likely candidate for a real estate loan. If your FICO credit score is higher than 740 you can probably qualify for the prime mortgage rates assuming you match the other lender qualifications . Loans backed by the FHA typically have less strict credit standards .

The DTI Ratio

The debt to income level is a very important item lenders regard when approving mortgages . They not only want to see that you have a proven history of paying your bills , they also want to see that you have enough income to cover the mortgage loan . The general guideline is that lenders will allow a 35% total debt to income , and from that debt, they will allow up to 28% for the mortgage . If you don’t have much consumer debt: credit card bills , car payments , student loans, etc. you can buy a nicer home . In reality, many FHA loans and other Fannie Mae and Freddie Mac programs will allow debt to income ratios at close to 50% . For exact criteria, you will have to talk with a mortgage lender about your particular home situation .

If your debt to income ratio is too high , you will not be able to buy a house even if you have an 800 fico credit score .

Home Buyers with low credit scores, but good income to debt ratios , and a significant down payment can probably qualify for a mortgage loan through hard money or private lenders, but they will have to pay for it. The rates will be substantially more expensive than traditional loans .

Home buying options for buyers with bad credit scores

If you have a low credit score , try to fix it as soon as possible . Credit is fixed by having debt and paying it on time, and in full all the time .   It is also possible to buy Baltimore MD Real Estate with bad credit by using Rent to Own, Lease with an Option to Buy , or Seller Financing.