It's advice you've probably heard all the time if you're thinking of buying a home: start working on improving your credit score so you can get a mortgage. But what if you don't have a credit score? Do you have any hope of getting a mortgage if your credit score is zero or non-existent because you've simply never taken on debt in the past? The answer is "yes." Getting a mortgage with no credit score takes some planning, and you may have to wade through some extra red tape — but it is possible. Here's a more detailed look.
You can only take out a traditional mortgage.
There are three basic types of mortgages: FHA mortgages, VA mortgages, and traditional mortgages. FHA mortgages are insured by the Federal Government, and because of that, they are all subject to certain restrictions. The government will only issue them to individuals with a certain credit score. VA mortgages, similarly, are available to military personnel and veterans, and they have a credit score requirement. Traditional mortgages, however, are those issued by any bank — and are not backed by the federal government. Each bank can set its own standard as to who they're willing to grant a traditional mortgage to — and some banks are willing to lend to customers without a credit score.
You'll need to find the right bank.
Not every bank offers loans to people with no credit score. This is because the process of determining the creditworthiness of someone with no credit score is more involved. The bank will need to look more thoroughly into your work history, income, and tax documents to determine whether or not you're capable of paying back the loan. This process is called manual underwriting. So, when you're looking for a bank where you can apply for a mortgage with no credit, you should be asking various banks whether they perform "manual underwriting." You'll have better luck finding a small credit union or regional bank that does this; large national banks don't generally offer this service.
You should be prepared to wait.
The process of applying for a mortgage with no credit score is a bit more complex because of all the research the bank needs to do. There will be more paperwork for you to fill out, and you may have to wait a few weeks to find out if you're approved or denied. Be prepared for this; plan ahead and apply well in advance of when you plan to start shopping for a home.
Don't let a lack of a credit score keep you from purchasing the home of your dreams.
Welcome to my website. My name is Larry Silva, and I want to talk a bit about private mortgage insurance. You may have heard the term PMI mentioned when you were in the process of purchasing real estate. When I first heard my lender talking about PMI, I was very confused. It was my realtor who sat me down and explained what private mortgage insurance was and when someone is required to purchase it. He told me that PMI is not lifelong insurance; it can be cancelled when the mortgage principal balance reaches a certain point. Once it was explained to me, private mortgage insurance was no longer a mystery or a confusing concept. I would like to pass on what I learned and hope that you find it to be of value.