Getting a mortgage in today's real estate environment is still possible even though many people think otherwise. Many consumers have spent the past few years cleaning up their credit to make this possible. This was a favorable decision considering that credit scores are very important as part of the mortgage transaction.
Good credit scores, probably 700 and above, are necessary to be approved for a regular conforming mortgage, otherwise known as a conventional loan. Conforming mortgages are not as easy to get as years ago, but they are not so terrible either. Consumers need to be prepared to submit any and all documentation that is requested by the lender, such as assets, income, and employment. All of these things must be verifiable.
First time home buyers are better off turning to FHA for a mortgage. FHA has lower credit score requirements and lower down payment options. With a credit score as low as 580, FHA will allow a down payment of 3.5%. In addition, FHA allows gifts from family and employers as long as they can be documented according to their guidelines. Another benefit is the use of housing grants and loans. Many localities, states and counties offer housing grants or housing loans. Some must be paid back, some do not. Interest is usually low if it must be paid back. Using these additional venues could put a home buyer into a house with a zero down payment. Many people think that FHA is difficult when being approved for a loan. That is not actually the truth, they just require more documentation from borrowers in order for the transaction to be complete. Today, more borrowers are using FHA than any other mortgage source.
Of course, for the military and veterans, there is the Veteran's Administration or VA loan. These are zero down payments loans and have their own set of guidelines which require quite a bit of documentation. They are definitely worth it for those who qualify. One of the most important facts for the VA loan is that if you are buying a home to settle down and are leaving the military, make sure to have a job that can be documented and confirmed with a contract prior to applying for a VA loan.
For all types of loans, verifiable employment is always a factor in the equation. Assets and reserves are desirable and the ability to repay the loan is, without a doubt, mandatory.
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