If you are a first-time homebuyer it's possible that you might not have much of a credit history or you might have no credit history at all. This could present a problem for you when you are trying to get a mortgage to buy your home. Many lenders do not want to loan that much money to someone who doesn't seem to have any credit history or a history of making payments on time.
Can you still buy a home with no credit history? Yes, it is possible and there are some interesting ways to prove you are responsible for making payments on time.
You Have A Payment History
While you might not have a credit history, you most likely have a payment history. You can use this payment history to prove to lenders that you are responsible and can make payments on time. Payment history is much like a credit history except it doesn't follow the money you have borrowed like with a mortgage or a credit card. Instead follows any payments you have made for essentials.
For example, if you have paid rent on time for years, you have a history of making on-time payments for housing already. If you have made payments for utilities for your rental, you can also show a payment history of making on-time payments to utility companies. The same is true for your cell phone or landline, car payments, student loans, etc.
Major credit reporting agencies do take things like rental payment history into account when giving you a credit history, so check to see if you might have one already. If you want to buy a home with no credit history it is possible to go this route.
You Could Get An FHA Mortgage
If you are wanting to buy a home with no credit history, you might want to look into trying to get a Federal Housing Administration mortgage or FHA. An FHA can connect you with a lender who will take a non-traditional credit history or no credit history into account when they decide on approving a mortgage.
You need to show you have no delinquencies on your rental payments for some time. Plus, you have no arrears payments on any other creditors such as utility payments or car insurance payments. You also can't have any accounts with collection agencies unless it's for medical reasons.
You must be able to prove you have enough income to make your mortgage payment without seriously straining your finances. You must also have some money in reserve left after the down payment and first mortgage payments are made.
Try A Small Lender
If you want to buy a home with no credit, you might have to turn to a smaller lender to get a mortgage. Bigger banks don't always like to take a risk on those with little to no credit even if they have a history of making payments on time. Smaller lenders are often more flexible with whom they work with. You could try an independent mortgage broker, online lender, and even a small bank to see if you could qualify for a mortgage through them.
If you're trying to buy a house, but you don't have a credit history, talk to a no credit financing lender in your area for advice.Share