How to buy a house with bad credit, no credit, and no money down

Try Habitat for Humanity. But without a decent credit history or a large down payment a house is out of their reach.

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Hope this helps, Scott<>
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Scottgem's Blog
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Ditto Scott. There are several agencies that can help them get into government housing...
Basically, apartments that charge rent based on how much they earn. .

Example: one person may pay $500/m for a one bed apartment, the next person will pay $450/m for the same apartment--its based on the individual.

Act fast, those usually come with a 1 year waiting list at minimum. Renting would be their best bet; owning cannot happen under those financial circumstances

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Wow, that doesn't make me feel good about my chances either

I think the best chances are having either 1. Excellent credit or 2. A BIG down payment. You can get away with a small down payment (5% - 20%) or with an 80/20 loan... But not with bad credit on top of it.

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Bottom line folks is the credit... If you have REALLY good credit , you can buy with no money down. Good credit needs 3%-5% down. If your credit is bad, doesn't matter how much down... Not going to happen in the conventional market. Usually sub -prime will do it. At a much higher rate.

Government housing (Section 8) is probably a good alternative. However, I am not sure of their credit requirements.

I had to answer this question , I am a mortgage and credit consultant, as well as real estate investor.

Step 1. Get pre-qualified

Step2. Find the house you pre-qualify with a lot of equity

Step 3. Ask the seller if they would cover the closing costs and hold a seller second

Step 4. If the house has equity ask if they would be willing to give you the equity at closing.

Step 5. Don't let anyone tell you this can't be done or this is illegal,or you will never own a house.

Scenario:

Credit score: 565

Qualify for a house for $150,000

Lender approves you for 80%

You would need 20% down to eqaul 100%

Also need 6% for closing costs

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To accomplish your dream:

Lender gives you 80%

Seller holds second , which is the 20% down so you need no downpayment (also ask seller to forgive the second after the deal is closed)

Seller covers your closing costs 6%

And you went into the deal with your credit and no money down,

Oh last but not least, seller has giving you the equity in the house, which goes to a third party (trust account, or for repairs,etc...)you put this into an account to pay your mortgage for a year,


The rest you work to fix your credit and build your income,


Thank you,

Hello consultant:

And, I just had to respond.

I agree with you that there ARE creative methods available to the OP. I think you have the right idea too... But, you're missing something.

In the first place, a seller looking for a credit challenged buyer is in BIG trouble himself. He probably is upside down and has NO equity. But, if he DOES have equity, why would he give it away?

The next problem I have is IF the seller DOES give the equity away, it ISN'T cash and can't go into a bank to pay for anything.

excon

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I didn't drink the koolaid

If that is the case ,why am I closing on a 1.2 ML dollar deal in Tx right now , client credit score of 576, seller holding the second and covering the closing costs, see as I said in my answer before if I listen to people that comes off that this can't be done,


I wouldn't be in my house now, and as well as my clients, the whole trick to the whole thing, is to understand that once you are in work on your credit , pay your mortgage for a year, and in a year Refinance with a better credit score,

Most sellers these days look for a pre-approval letter or Proof of Funds, I have been doing this for 3 years and no problems, and just like now with the sub prime market a lot of LOAN OFFICERs got nervous, but not I , so I thank you for your opinon, but until I can't do what I am doing and fail at what I do , then I don't see any other way, thank you

My point exactly ExCon. Listen up Boop, I have been around a long time and there isn't too much I have not seen in this business. You don't need this kind of crappy loan. First of all, if the seller holds a 2nd there is no cash equity to give you. Second, if he holds a second and forgives it, he's nuts. Why would he? And on top of that you want him to pay closing costs. You are looking for Santa Claus on this one. He would be making no profit on the house. You would need a much higher score to qualify for an 80%20% loan to begin with or your interest will be out of sight. Before you know if you will be in foreclosure.

Do not do this! I don't care if it's legal and can be done. As a loan officer, I am supposed to guide you to homeownership, not bury you. Everyone wants to own a home and it can be done. But sometimes it takes time.

Go and sit with a reputable mortgage originator. Give them your income and let them qualify you for a loan. I can tell you that $ 600 a month is not going to buy much. Property taxes and insurance are part of the payment and considered when qualifying for the mortgage. I have spoken with many people in your situation and after doing what I explain they call back in about six months to a year and can go forward with a decent mortgage at a decent rate. You want a dream not a nightmare!

A few questions I would ask. What is hourly wage and what did they gross last year and year to date? Any money available for down payment? What state are you in. (There may be grants available.) Is there any SSI or child support coming in, in addition to regular wages. Let me know. I will try to help you.