There are a lot of reasons why you may have no credit. Perhaps you have recently filed bankruptcy and you don't have any current credit to your name. You may also be young and freshly into adulthood and haven't built credit yet. Or, you may be a person who prefers to pay cash for everything and you haven't had an interest in building your credit via obtaining credit cards. Not having any credit may not appear to be an issue until you go to buy a home, and then you can find yourself unable to get a house at all. You can buy a home without any credit, however, and here are some ways you can.
Choose the right lender
A small lender or a credit union may be your best bet for buying a home when you have no credit. The reason for this is due to their less strict rules on lending to people with low or no credit scores. Larger or national lenders often have guidelines they must adhere to in order to lend to individuals without a higher credit score and can be unmovable on their stance towards no credit home buyers. Your real estate agent can help you work with a lender in your area to secure you a low interest loan.
Have a larger down payment
In order to secure a mortgage for your home purchase when you have little to no credit, you may need a larger down payment. Be prepared to put 20% or more upfront down on your home purchase. The rate varies depending on the price of the home you are seeking. If you have a set amount you can afford to put down on a home, you will want to shop for homes that allow the lesser down payment so you have a higher chance of securing the mortgage loan you need.
Consider a cosigner
A cosigner who has good credit can help you get into a mortgage with greater success. What a cosigner does is offer greater security to lenders regarding paying back larger loans. If you fail to make your payments on a regular basis, the cosigner, with their proven credit responsibility, can be held responsible for the defaulted loan. A trusted family member or friend is best for this type of commitment. Make sure you have every intention of paying your loan so your cosigner can feel confident in taking the mortgage on with you, since you will be the person primarily paying the mortgage until it is fulfilled.
Your real estate agent will be able to help you secure a loan when you have no credit. Make sure you are honest about your credit needs so they can be able to secure you the best mortgage with the best rates possible.
For more information, contact local professionals like SWE Homes.