Most people realize that their credit scores matter for many reasons in life, including when they want to buy a house. If you want to buy a house but have no credit, can you still buy one? The answer is yes, but it might take a little more work. Buying a house without any credit is definitely more challenging than buying one with good credit, but it might be easier than buying one with bad credit. Here are some things to know if you want to buy a house without any credit.
You Will Need to Qualify for a Loan
The hardest part of buying a house with no credit is qualifying for a mortgage loan. Most lenders check a person's credit and will not approve a loan if the person has no credit or bad credit. If you have no credit, you may want to work with a mortgage broker. A broker might be able to find you a loan that does not require credit. Instead of basing the decision on your credit, the lender might base it on other things.
For example, the lender might base the decision on any credit history you can prove. For example, if you rented an apartment for the last few years, ask your landlord to give you a document that shows you always paid on time. If you can do this, your lender might accept this document as proof of creditworthiness.
Your lender might also approve the loan if you can supply them with bank statements for the last couple of years that prove you manage your money well.
You May Need a Larger Down Payment
The other major factor that will help you get a loan is offering a larger down payment. When people buy homes with no down payments, the lenders take more risks. If you can offer a significant amount of money as your down payment, it instantly decreases the lender's risk in the deal. As a result, they might approve a loan for you without any credit history.
You Should Stick with Buying a More Affordable Home
The other thing to consider is that you may want to stick with buying a more affordable home. In other words, look for starter homes for sale. These homes usually cost less, and you might have an easier time getting approved for a loan to buy one rather than to buy a more luxurious house.
If you have questions about buying homes with no credit, talk to a real estate agent and mortgage lender or broker.Share