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Could I qualify for a home loan with a low credit score and a high down payment?

Could I at all qualify for a home loan with a low credit score of 518 if I have $40K to put down towards a purchase price of $100K? by heathe_744_240 from Nashville, Tennessee. Jan 2nd 2013 Reply


William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions

There are lenders out there that will go as low as 500; however the guidelines are so strict, that most don't qualify. There are also Hard Money Lenders out there that lend based on equity rather than credit scores, but those types of loans are typically very expensive.. 4 to 8 points and interest rates above 10%... you should stay away from these types of loans... you're better off working on fixing up your credit than trying to find someone to work with your low score.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jan 2nd 2013
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 2,431 contributions

You didn't explain why your score is so low. I'm guessing it is because you have unpaid delinquent items, judgments, liens or other less than satisfactory items in your credit past. Most lenders are going to require those items to be resolved before granting you a new mortgage. Private money lenders are going to be harder for you to find based on your relatively low loan amount. It is likely that their minimum fees are going to be higher than allowed on a $60,000 primary residence loan. Your best bet is to start working with a Licensed Mortgage Banker/Broker to see what you need to do to get your credit improved. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jan 2nd 2013
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Nancy J Releford (nancyreleford)
#4 ranked lender in Tennessee - 233 contributions

The short answer is NO. What is the reason for your credit score being so low?

Jan 2nd 2013
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Barb Lanis (BarbLanis)
#69 ranked lender in Illinois - 679 contributions

Your score is too low. You may find a lender to go down to 580, but they are hard to come by. My advice would be to look at your credit report using a local non-bank mortgage broker and determine if there is something that can be done to raise your scores.

Jan 2nd 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,249 contributions

There are no standard mortgage options for someone with that low a credit score, regardless of the downpayment. The loan would be considered too risky. If you have that much money to put down you migh be better off using some of it to help fix your credit and perhaps within 3-6 months your score would be in a range where you could purchase. The only other option would be a "hard money" lender with very high rates and fees, and usually a short term solution.

Jan 2nd 2013
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Chris Samples (csamples)
#139 ranked lender in Texas - 82 contributions

Unfortunately no. Some lenders can offer programs at minimum score of 580; though most will require a 620. Perhaps you can utilize some of your available down payment to pay down/pay off collections, liens or tradelines which will improve your credit score.

Jan 2nd 2013
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Ron Aguilar (ronaguilar)
#67 ranked lender in Utah - 20 contributions

I appears you need guidance from a Loan Officer like myself. Since 1995 I have been guiding people to get qualified to buy or refinance a home. If I can't help you today then we will work together until you do qualify. In the meantime maybe you can refer anyone you know that may need advice, they will be happy for the referral.

Jan 2nd 2013
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Jason Vondrak (jvondrak)
#220 ranked lender in California - 1,741 contributions

Generally in order to qualify for a loan, the minimum credit score requirement is 620. Is your credit score that low due to outstanding debt? If so, consider using some of the money you have set aside for your down payment now to pay off that debt and help improve your credit score.

Jan 2nd 2013
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Linda Miller (Linda Miller)
#2 ranked lender in Utah - 572 contributions

No, your best bet is to work on your credit. I would find a reputable credit repair company and start. You've heard the quote "A journey of a thousand miles begins with a single step". In your case you need to make that first step. It may take a while but once it is done - all kinds of things in life will be easier. One other thing, you might be able to find someone who will seller finance. Rates are generally higher and I would advise you to use a lawyer on the paperwork to make sure all notes and titles are recorded properly. Good luck.

Jan 2nd 2013
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Kevin Prince (KevinPrince)
#66 ranked lender in Pennsylvania - 26 contributions

Hi, You can get a private money loan at 60% loan to value but it will be expensive. Your best results will be to get your credit score over 580 and go with an FHA lender that will work with your score of 580. As suggested, you can work on your credit score with a reputable credit restoration company. I have some referrals for these companies and please be careful of who you use with your credit. There are some crooks out there that will take your money and disappear. Kevin PrinceSVPLiberty OneKprince@liberty1amc.com858.926.8904

Jan 2nd 2013
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

You can likely find a Hard Money Lender that will be willing to lend you 60% of the value of the home. Best of Luck!

Jan 2nd 2013
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Jeremy Redlinger (JeremyR)
#29 ranked lender in Minnesota - 191 contributions

Check with a local mortgage broker licensed there in TN. I am a broker in MN and my loan search program is pulling up one lender who will go down to a 518 score on a 60% LTV purchase.

Jan 2nd 2013
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Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions

Realistically, the answer is no. That score is just way to low, no matter how much down payment.

Jan 3rd 2013
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