Your Home for Real Estate Information

Don't Have a Credit Score? How You Can Still Purchase a Home

28 May 2020

Cody Day

If you are not carrying debt, such as a car payment, student loans, or a credit card, and you have not for years, you may not actually have a credit score at all. With all the emphasis put on having a good credit score, it is easy to overlook the fact that someone living debt-free isn't able to build a credit score. If you are someone who doesn't have a credit score because you have not accumulated any debt yet, or you have been living debt-free for a long time, you can still get a mortgage for a home.

Find a Lender Who Does Manual Underwriting

If you don't have a credit score, you are going to need to find a lender who does manual underwriting. Homes no credit is the process of figuring out your ability to pay a mortgage without relying on the information that credit reporting bureaus typically provide lenders with. Lenders do not want to lend hundreds of thousands of dollars to someone who can't afford it. At the same time, some lenders acknowledge that there are ways to show you are financially responsible without relying on a credit score.

Be Prepared with Lots of Documentation

Undergoing a manual underwriting process can be time-consuming, which is why if you go this route, you need to come in prepared. It is a good idea to start to prepare the proper documentation even before you find a lender, so you can get this lengthy process started as soon as you find a lender to work with. When it comes to manual underwriting, you need to show that you have a history of making payments on time, that you have a steady income flow, and you have the ability to make your mortgage payment. To show that you have the ability to make payments on time, you are going to want to get copies of any bills you pay to show you pay your bills on time and don't have late fees. For example, your car insurance bill, your internet bill, cell phone bill, or any other utility bill you have. If you pay for health insurance or life insurance, you can show that you pay your premium. If you currently pay rent, you can also document that you pay your rent on time. Be prepared to show two year's worth of documentation.

Save Up for a Big Down Payment

When you ask a lender to manually underwrite your loan, chances are, you are not going to qualify for one of their loan programs that allow you to put a small down payment on the home. Instead, you are going to have to pay the full traditional 20% down payment. To increase the chance that the lender will provide you with a mortgage, you may want to save up for a down payment that exceeds 20%. The less risk you present to the lender, you more likely you get approved for a loan.

If you don't have a credit score at all, you are going to need to find a mortgage lender who manually underwrites loans. You are going to need to get together documentation of all the bills you do pay to show you are financially responsible. You are also going to need to show steady proof of income, and have a sizable down payment saved up. If you do these things, you should be able to get a mortgage for a home, even without a credit score.

Share  

Search