First deal financing with average credit score

5 Replies

Hi Bpers looking for advice on how to finance my first deal. My credit score is sitting right around 605 and not sure if its smart to get a conventional mortgage or use private money to finance. Which route do you think is best and what percentage would I have to put down? Thanks for the help. 

Conventional is always going to be better for your first few deals if you can get it.  Rates are still good and 30 years fixed is nothing like you can get with private lending.

I don't think 600 is undoable.  Start with a local bank and ask.  

More importantly - what are you doing to improve your credit score?

Tough with that score. I’m between 700-730 (depending on what score model used) and I’m having trouble getting a conventional. If your score is the only road block, you may be good, but lenders are really good at throwing up new road blocks.

@Mike McCarthy I appreciate the advice. As of right now I pay all my bills on my credit card and then instantly pay the credit card with my debit card. I also pay my student loan payment every month on time so that helps a little. My score isn't low because of anything major on my report, just that its still new credit. Any advice on how I can improve more? Also- any idea what you would guess id have to put down as a down payment? 

@Adam Lopate

Why not do a multi-family FHA loan? The required credit score is below 600 I believe and your down payment is only 3.5-5.0%. You can live in one unit and rent out the other unit. The only caveat is you MUST live in that unit for a year before you can start trying to move out. This is what we call House-hacking here on BiggerPockets.

Hope this helps. Oh and you can ask almost any lender for that type of loan. They differ slightly from lender to lender, so its good to shop around.

I’ve done some crazy stuff to improve credit score. It helps if your married. I keep auto loans and credit card debt in my wife’s name so it doesn’t show on my dti. Just buy something and pay it off every month. I have a couple cards that just have 1 account that automatically charges each card every month and pay it off. The best way is TIME. Unfortunately there is no way to speed that up. Make sure you get copies of all 3 of your reports and dispute the ***t out of the bad stuff. Pay your bills on time and keep your utilization low.

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