If
your credit is shaky, the safest bet for buying a home is to save and wait for
your finances to firm up. That said, there are other options when it comes to
paying for a home. Here are four of them.
Get
a co-signer.
If
you’re fortunate enough to have a close friend or relative with good credit and
enough cash, you can opt for a co-signer loan. In this arrangement, the
interest rate and approval are determined by the credit score of the co-signer,
which means you can get a loan you otherwise wouldn’t have access to.
Use
bankruptcy to your advantage.
Bankruptcy
has negative associations for obvious reasons, but it also offers the
possibility of a new start. After you file for bankruptcy, lenders will focus
less on your credit score and more on the rest of your financial profile: your
income, your ability to pay your bills on time, and your ability make a down
payment. Save your money, pay your bills consistently, and keep a steady job,
and bad credit or no, you’ll likely qualify for a traditional loan after a year
or two.
Get
an interest-only loan.
Interest-only
loans allow you to pay only the interest on the loan until you have a regular
income to start settling the principal. This is a great option if you expect to
earn a lot more in the next few years, or if your income is mostly in the form
of infrequent commissions or bonuses.
Ask
the government.
The
Federal Housing Administration has sponsored programs that offer loans to with
very low interest. In the FHA’s 203(b) program for first-time homebuyers, for
instance, your down payment can be as low as 3.5% of the purchase price, and
most of your closing costs and fees can be included in the loan. FHA loans do
not take credit ratings into account as long as you have a regular income that
can ensure consistent payment.
