Unfortunately, sometimes a poor credit score can be beyond your control. Perhaps a medical issue caused you to fall behind on payments, or maybe you were out of work for an extended period of time.
The good news is there are ways to improve your rating and there are loan programs available for those with a lower credit score.
Michigan FHA Loans Require Only a 580 Credit Score
Unlike conventional loans that require a score of 620 or higher, Michigan FHA loans will only require a credit rating of 580.
Additionally, homebuyers will only be required to put down a 3.5% down payment, allowing you to keep more money in your pocket.
So what are the requirements?
It is a common misconception that FHA loans are only for first time homebuyers. Although it is true FHA loans can certainly help Michigan first time buyers, the loan program is available to repeat buyers as well.
Michigan FHA loans will consider your debt-to-income ratio when determining your eligibility. FHA allows you to use 31% of your income towards housing costs and 43% towards housing expenses and long-term debt.
Learn More: Michigan FHA Loan Limits and Eligibility
What if My Credit Score is Less Than 580?
Fortunately, your credit rating is not a permanent number and there are several ways you can repair your credit.
There are many factors that make up your FICO score but 35% of your score is based on your ability to pay bills on time. So catch up on any late payments and be sure to make all future payments on time. Automatic debits or alerts can help you stay on track with your payments.
Another 30% of your rating is based on the amount of money you owe. So paying down credit cards and other debt may result in a significant increase in your rating.
What if I Had a Bankruptcy or Foreclosure?
As long as you have shown responsibility and improvement since your bankruptcy or foreclosure, you will still be eligible for an FHA loan.
In order to demonstrate your financial improvement, borrowers must be 2 years out of bankruptcy and 3 years out of a foreclosure. However, this waiting period is significantly less that other loans, making FHA loans the perfect choice for those looking for a fresh start.
Contact a Michigan FHA Loan Specialist for More Information
Are you ready to see if you qualify for an FHA Loan? Julie Krumholz from Main Street Bank has over 30 years in the mortgage industry and specializes in Michigan FHA Loans.