Frequently Asked Questions
Q: If I don’t have a 620 credit score, can I still qualify for a first-time-home buyer loan?
A: Many mortgage loans only consider your last 12 months credit history, unless you have a bankruptcy caused by credit mismanagement in the last 3 years. Some mortgage loans only require a bankruptcy to be discharged for 2 years with a credit score above 580.
Q: I am involved in a land contract. How can I get credit for any down payment or monthly payments I have made to the seller?
A: If you have made at least 12 verifiable payments by check or money order, you can refinance your land contract to pay off the remaining balance and potentially include any closing costs if the value of the home is sufficient. Of course, the lender will also take in consideration other credit qualifications such as job time, credit score and equity in the home, also referred to as loan-to-value.
Q: I’m involved in a consumer credit counseling program. Can I still qualify for a first-time home buyer loan?
A: Yes, as long as you have been in the program for 12 consecutive months and have made timely payments. The lender will only consider the one payment made to the credit counseling agency in your monthly debt calculation, not what is showing as payments on the credit report. Some credit counseling agencies require the applicant to ask permission to open any new debt, such as a mortgage. As always, the lender will consider other factors on your loan application in addition to your credit history.
Q: How much out-of-pocket money will I need if I do qualify for a no-down-payment mortgage?
A: Typically, the seller can pay the majority of closing costs as part of the purchase agreement through what is called “seller concessions”. There is also a loan which allows a buyer to finance closing costs up to the appraised value of the house. If either of these two methods are used, your out-of-pocket expense can be limited to your appraisal fee and your first year’s premium of homeowner’s insurance. This figure usually ranges from $600 to $800.
