What Are Your Mortgage Options When You Have No Credit History?

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Are you ready to buy a home, but you're worried about your lack of credit history becoming a problem with being approved for a loan? It helps to know what your options are for securing your home mortgage.


The best bet you have at getting a mortgage with no credit history is to use a cosigner. This means that the cosigner is saying that they trust you to make regular mortgage payments and pay off the loan, and it will impact the cosigner's credit history if you do not do so. This is why mortgage lenders agree to use cosigners in situations where the borrower has no credit, since the cosigner is essentially vouching for the person that needs the loan.

FHA Loan

One of the benefits of using an FHA loan is that you do not need to have a credit history in order to use it. Instead, your approval will be based on proving that you are capable of paying your debts. This can be done by having a rental history with a reference of a previous landlord that can say you paid your rent on time each month. It also helps not having any overdue bills that are showing up on your credit report, especially when it comes to utilities for your previous residences. 

Rent-To-Own Homes

You may be able to find a rent-to-own home that appeals to you, since the unique financing situation gives you the ability to buy a home without having a credit history. The rental agreement typically states that a small portion of your rent will go towards the purchase of the home. There will eventually be a point where you have the option to buy the home or continue renting it. This gives you some flexibility because you are not fully committed to buying the home when you move in, and some of your rent goes toward building equity if you eventually decide to purchase the property. 

VA Loan

If you or your spouse qualify for a VA loan, know that these loans have several benefits to veterans. You are able to use this type of loan to purchase a home without a good credit and without a down payment. This is what makes home ownership possible for veterans that are returning home and have not been building their credit history over the past few years. It's even possible to avoid paying for PMI, often known as mortgage insurance, when you do not provide a 20% down payment.

To learn more about no credit financing, talk to a financing agency today.