FHA loans aren’t the only type of mortgages out there. If you are looking to purchase a home, it’s important to know all your options to choose the right fit. A 203k loan, for example, may be best if you plan to purchase a fixer-upper. That’s because you can roll the estimated cost of repairs into the loan, allowing you to pay in monthly installments rather than all at once.
If you are in search of home loans for applicants with bad credit, you have options, too. You may be surprised to learn that your credit score isn’t always the biggest factor when financing a home purchase. Learn more about other types of home loans below.
Whether you’re a first time home buyer or have purchased your fair share of homes, it’s important to explore your options for financing. There are dozens of types of home loans available, each one with different terms, interest rates and policies.
Some home loans are specifically designed to fit certain needs. A 203k loan, which is a branch of the FHA home loan program, can help you bundle the cost of a home and any necessary repairs into one purchase. This is perfect for anyone interested in buying a fixer-upper or refinancing their current loan with the cost of maintenance.
The 203k loan program has its limits. Currently, you can only finance up to $35,000 for repairs under this program. And it’s important to note that you must plan to live in the home after making repairs.
Listen up, home flippers: If you plan to fix up a home and resell it for a profit, you cannot use the 203k loan.
Home loans for bad credit include standard FHA loans, but they aren’t your only option. If your credit score doesn’t quite qualify you for a conventional loan, consider these other loan options:
- VA home loan – If you or your spouse are veterans, you may qualify for a home loan provided by the Department of Veterans Affairs (VA). These are also known for their favorable terms.
- USDA loan – Certain areas of the country are known as “rural areas,” and homes/applicants in these parts of the U.S. may qualify for this loan provided by the Department of Agriculture.