This post is sponsored by improvefinance.com.au
Many economists say that the U.S. economy is trending higher. At the same time, the percentage of Americans who can qualify for typical mortgages isn’t. After the Great Recession, lenders got stricter, and they haven’t completely eased off yet. Many lenders want to see good credit scores, a stable work history, and even a down payment before they will approve a loan.
There may be some alternative ways to get a home loan that can help some prospective home buyers though. Learn more about how many Americans can qualify for a home mortgage and what it takes to qualify.
Who Qualifies for A Home Mortgage?
According to a report from the Federal Reserve’s New York Bank, the number of new mortgages declined between 2016 and 2016. In addition, average credit scores for people who got mortgages was over 750, which is quite a high number. Average American credit scores are under 700. In other countries, different scoring systems are used. To get a home loan in Australia, you need a good score known as VedaScore, which is on a 0-1200 scale.
Regardless of where you live, just because average credit scores for new mortgages are high, you shouldn’t assume that people with lower scores can’t ever get approved though. There are still people who manage to get government-backed mortgages with credit scores at low as 650, but these usually require a substantial down payment or some other way to get equity in the home.
What Percent of Americans Could Buy A Home?
About 58 percent of Americans do have a credit score over 650. So, if you look at it that way, just about 60 percent of people might qualify for a mortgage program. Most people in the lower ranges of acceptable mortgage credit could need a 20-percent down payment, so it’s impossible to say how many individuals and families that might eliminate. Some folks with lower credit scores might also be able to use a program from the VA or another government-related organization to qualify for a mortgage without such a large down payment as well.
Besides credit scores, lenders look at other factors:
* They consider the amount of existing debt, especially unsecured debts. They tend to view secured debts, like those for cars, more favorably than credit card debt.
* Lenders also look at employment and employment history. People who have remained at one job or run a business for a few years may get more leeway than people with a spottier work history.
How to Find Out If You Qualify For A Mortgage
The easiest way to find out if you can qualify for a mortgage is to speak with an experienced mortgage broker. Even if your credit score is average, a good broker might be able to find you a program that helps people buy a house. If that doesn’t work out, you may be able to work to rebuild your credit or even find a rent-to-own program that works out well for you. You may also be able to make a deal with certain lenders who base their credit decisions more on the value of the home or other equity than on credit scores. Don’t assume that lenders won’t accept you before speaking with a mortgage broker.
