[kattygirl]

I am trying to buy a house. The price they are asking is 25,000 due to the fact the house needs cosmetic work. My husband is a carpenter and so we would really like to buy it. The problem... our credit is toast. I have 10,000 I can put down but I don't know how to go about convincing the bank to loan us the extra 15,000. Anyone have suggestions on how to approach this? What would be my best coarse of action? Any information would be great. Thanks.

[AliMarGoo]

Have either of you tried a first-time home buyers loan? Most banks issue these to people who have fair or poor credit... if neither of you has already taken one of these out before. If a place sees that you have more than a quarter of the cost in a down-payment, someone more than likely would do this for you. Good luck!

[excon]

but I don't know how to go about convincing the bank to loan us the extra 15,000.

Hello katty:

You're not going to find a bank that will loan you the money. But you can find some money on the secondary market. Look in your newspaper under loans. You'll find just what you need. Course, it's going to cost you a bundle.

excon

[alkalineangel]

Hello katty:

You're not going to find a bank that will loan you the money. But you can find some money on the secondary market. Look in your newspaper under loans. You'll find just what you need. Course, it's gonna cost you a bundle.

excon

Not exactly true. She nearly has 50% down, so that is good in the eye of the bank, equity means less of a chance of walking away...

You can get a FHA loan that will not require a credit check... There are other options as well, but I know for a fact that the FHA will work. We have decent credit, but it had some flaws, and we got the lowest rate available on our 127,000 loan, there was NO credit check. You can also look for a lender that does manual underwriting. Good luck

[alkalineangel]

I would see what options there are about using some money for improvements to the house. Although, if you have to borrow double what the house is worth it will be a risk, you are going in upside down... but it could be very very beneficial when you go to sell the house if you make the right updates. You could come out way ahead.

[Dr D]

With all due repect, ALL FHA loans require a credit report on the borrower. First time buyer programs provide down payment assistance, and perhaps a below market interest rate, but the borrower must still have satifactory credit. FHA is somewhat more lenient on credit than FNMA/FHLMC, but it still needs to be acceptable. Most mortgage lenders have minimum loan amount limits, which are well above $15,000. You might try to get a Purchase Money Home Equity Line Of Credit from your bank or Credit Union. Depending how bad your credit is, a 60% Loan To Value should provide good security. If that fails, you could try to find a private investor who would loan you the money at a high rate. If you have Judgements and/or Tax Liens, that fact could keep you from getting a loan because they could impair the first lien position of the mortgage.

[alkalineangel]

Really? When we got our loan, I was told there was no credit check, they looked at other factors besides the expirian/other credit ratings... like our utility bills and so forth.

[Dr D]

Most likely, when you got your FHA loan, you did not have much of a credit history, and perhaps no credit scores. The lender did pull a tri-merged credit report on you. You can confirm this by going to www.annualcreditreport.com/cra/index.jsp and getting a free report. You will find that there was an inquiry by the company that your lender uses for reports. FHA allowed "alternative" credit, such as rent history and utility payments to prove your credit worthiness. FHA and VA are more conducive to alternative credit than Conventional.

[alkalineangel]

No no... we have quite a credit history... lol... I guess it just wasn't as bad as we thought. I have already used my free credit check for the year... LOL...

[alkalineangel]

This says differently... FHA loans are not the same as they were in the past...

FHA Loan - FHA Loan FAQs

[kattygirl]

I have settlements on my credit report but no judgments,bankruptcies or repossessions sooo I am hoping someone will take a chance on me. I have paid 600 a month in rent for the past 11yrs and have never been late once. A house payment would be half that amount.

[mr.yet]

Does your bank offer mortgage? If so apply with them since you have a large down payment.

[Dr D]

Dear Alkalineangel: I went to that FHA site, and it clearly stated that while FHA does not require FICO scores, they do need your credit report. Since you did have a credit history, there may have been some dings that made it necessary for the lender to obtain alternative credit verification. Did you get your free yearly report from all three bureaus? If you only got it from one, you can still get the free one from the other two bureaus.

[alkalineangel]

Oh, Im not trying to be rude, sorry if it comes out that way, my hormones are flaring... I was just going by what my lender told me... thanks for the info about the other 2, I will have to try them. :)

[DianeV Sr Loan Officer]

I would be curious to know if this FHA loan ended up closing. If the house needs that much work that you are willing to borrow 50,000 then you are looking for the FHA 203k loan. That is a rehab loan. The FHA is very stringent on the condition of the property. Naturally, your payment will be higher than on a $15000.00 loan so you have to qualify from an income standpoint as well.

[alkalineangel]

My loan officer told me when I purchased my home last November that the FHA is no longer critical of the conditions of homes. We had absolutely no problem purchasing and closing on our home and the house definitely needed some work.