Real Estate Investment 101: Getting Started

Options for Buying a House Without Credit

Getting a loan without any credit is usually more challenging than when you have credit. If you have bad credit, getting loans is also more difficult. If you have no credit, you might think you cannot purchase a home. While it might be harder to get a loan, there are some options you can pursue. Here are two main options to consider if you want to purchase a house without any credit.

Consider Government-Backed Loans

The government has loan programs that they sponsor, and the primary purpose of these programs is to help people become homeowners. There are several government-backed loan programs you can pursue, and these programs might not require having credit. They do have rules and eligibility requirements that you must meet.

One of these programs is the FHA loan program. The Federal Housing Administration sponsors these loans, and they are one of the easiest types to get if you have no credit. FHA loan programs allow people to buy homes by proving their creditworthiness in other ways. For example, if you can prove that you pay your bills on time, you might qualify. You can prove this by submitting rental payment records or records from your utility bills.

Research Lease-to-Own Homes

The other option you can consider is buying a lease to own home. Buying a home in this manner involves renting to own a house. Your credit will not matter when you buy a house through this method. Instead, a home seller will require a down payment. You will not get this down payment back if you default on the loan, but the loan does not come from a lender. Instead, the home seller gives you the loan, and you pay them for the house. Each month, part of your rental payment applies to the home's principal balance. After five to ten years, you must apply for a traditional loan through a lender to settle the deal. Many people choose this option when they have bad credit or no credit, as it provides a way to purchase a home if you do not qualify for a loan.

These are the two primary options you have if you want to purchase a home without credit. One thing you should consider with either choice is finding ways to build your credit. If you start now, you can have credit next time you need it. To learn more about buying a home with no-credit financing, talk to a lender or real estate agent.