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Can You Get a Mortgage In Texas Without A Credit Score?

July 27, 2020 | By Reef Merhi
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Many first-time homebuyers ask, “get a mortgage in Texas without a credit score?”

It’s highly recommended that you pay off all your debt before you apply for a home loan.

Utilizing credit responsibly and paying off your balance each month can boost your score and demonstrate financial responsibility to lenders.

However, if you’ve never had a credit card, you may not have a credit score.

Now, when buying a home it is very beneficial to you to have a good credit score. It’s a lot easier to qualify with a good credit score.

But if you don’t have one, don’t worry! There is more than one way to qualify.

But, if you looking to get a mortgage in Texas without a credit score, the good news is you don’t need a credit score to get a mortgage

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No Credit Doesn’t Equal Low Credit

It’s important to understand that having no credit is not the same as having a low credit score.

You can get a mortgage without a credit score, but don’t expect to qualify for a loan with a 350 score!

A low credit score indicates that you’ve been reckless or irresponsible with credit. It is indicative of poor financial management and hardships.

Lenders will be unlikely to let you borrow unless your score is above 620.

When you have no credit, this lets lenders know you’ve never been in debt.

So, how can you qualify for a loan without a credit score?

How You Can Get A Mortgage In Texas Without A Credit Score

Your credit score is just one way your lender can examine your financial history.

There is another way to get a mortgage in Texas without a credit score.

Manual underwriting allows borrowers with no credit score to submit proof of their ability to repay debt. The lender will gather information and determine how capable you are of repaying the home loan.

You’ll have to submit a lot of documentation and be patient. Manual underwriting is not a quick and easy process, so it’s important to be cooperative with your lender.

If you want to get a mortgage through manual underwriting, here are the requirements you’ll have to meet.

1. Documentation

Documentation is the largest and most important part of manual underwriting. Without proper documentation, you won’t be able to get a mortgage.

For the manual underwriting process, be prepared to provide proof of income for the past 12-24 months.

You’ll also need to prove that you’ve been making regular, on-time payments for at least four monthly expenses.

Expenses like rent, utilities, phone bills, insurance payments, and tuition payments may be included.

Bring as much proof as you can and provide documentation to your lender in a timely manner. The more documentation you can provide, the easier it will be to get a mortgage without a credit score.

2. Select a 15-Year Mortgage

Some lenders may push you to sign up for an FHA loan because they are easier to qualify for. However, these government-backed loans come with high interest rates.

You don’t have to take out an FHA loan just because you don’t have credit.

If you are financially stable and able to provide the proper documentation, you will be able to meet the requirements for a traditional loan.

Stick with a 15-year mortgage with monthly payments no greater than 25% of your income after taxes.

3. Double Up Your Down Payment

If you don’t have a credit score, paying down more than 20% is an excellent way to prove yourself to your lender and get a mortgage in Texas without a credit score.

The higher your down payment, the lower their risk. It also allays the concerns of your lender. When you put down a higher down payment for your home in Houston, Texas, or really anywhere, you are proving to the lender that you are the kind of buyer that will pay down the mortgage consistently.

Pay down as much as you can to show your lender you mean business.

If you are looking for a home in Houston without a credit score, manual underwriting can help you prove your financial ability and secure a mortgage on a home you love.

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