There are more than a few loan programs that offer a low down payment and fairly easy to qualify for a new primary home.
FHA 3.5% Down, Fannie Mae 5% Down, Fannie/Freddie 3% First time home buyers programs.
Credit scores under (695) I would suggest FHA due to flexible fico requirements. Credit above (700) Fannie Mae easier on guide lines and finally Freddie Mac almost mirror image.
FHA will allow higher debt to income ratios for DTI. Fannie/Freddie have lower caps on DTI.
Fannie/Freddie will have Lower PMI versus FHA MIP if your Fico is above 720.
FHA 3.5% may have a tougher time getting offer accepted by seller versus Fannie 5% down.
There are more than a few loan programs that offer a low down payment and fairly easy to qualify for a new primary home.
FHA 3.5% Down, Fannie Mae 5% Down, Fannie/Freddie 3% First time home buyers programs.
Credit scores under (695) I would suggest FHA due to flexible fico requirements. Credit above (700) Fannie Mae easier on guide lines and finally Freddie Mac almost mirror image.
FHA will allow higher debt to income ratios for DTI. Fannie/Freddie have lower caps on DTI.
Fannie/Freddie will have Lower PMI versus FHA MIP if your Fico is above 720.
FHA 3.5% may have a tougher time getting offer accepted by seller versus Fannie 5% down.
I have $5,000 in credit card debt. I want to get a debt consolidation loan. Is that a good way to raise my credit score? It's around 634 at the moment.
Adding enough value to a property to be able to pull out your up front cash on a 75% LTV refinance on it is really, really hard without the tailwind of rapid appreciation. You're going to need a pile of cash to be able to take on that kind of a project. Most prospective BRRRR properties will not qualify for conventional financing, meaning that you have to take it down with cash, hard money, line of credit, or another source of money that is not a conventional loan.
Let's add a dose of reality as well. Saying that you want to BRRRR a property is a cute real estate term. You're buying a disaster of a property with a pile of problems that the seller did not want to or could not solve. It's a mess. And when you own it, you'll ask yourself "Why did I think this was a good idea?" about 100 times. It is lucrative when done well, but so much easier said than done.
@Helen Brennick The BRRRR strategy is great but keep in mind what @Travis Timmons mentioned. It's not as easy as some new investors believe. It's pretty challenging mainly from the lack of supply. If you're talking about CC debt and low credit scores I encourage you to correct those issues. You can't have road blocks stopping you from making quick offers on distressed opportunities. The market research, ARV, and number crunching should be done before or right after you walk a property. Only missing piece is rehab budget. Even the most experienced investors estimate that part but sometimes you have too. The rest of the deal already makes sense. You need some money in bank and a prequalification for a loan (minimum). That's completed before I view property and take people's time. Never waste other people's time.
My first property was distressed and had been on/off market for 35 days. I had no road blocks, little experience, and about $25k cash to my name. I used a 3% DP, conventional loan, and throw the rest of my money into the rehab. About 1/3 went into a new roof (paid in cash) and rest everything else. I even DIY'd some projects. You need to buy low and find cosmetic+ distressed deals. If the property is wrecked it won't qualify for a conventional loan. If it's too nice you'll over pay and trap all your $$$. There's a mid ground and you can find it.
Clean up your credit, stop spending on that CC, get pre-qualified for loans, and then walk properties (in that order). That's the best course of action to get started for most new investors. Cheers.
@Helen Brennick You got this! Completing a BRRRR deal as a first time homeowner is scary but worth it. The mindset required to buy a junky property, remodel, and create value could change your life. It puts you in the drivers seat.
If you're too interest to do a BRRRR, then I would recommend going with the house hacking model. After all, you're buying your own home (with better loan terms) so it's not entirely an investment. Then, once you've fixed it up and lived there for over a year, do it again. That's the safest and easiest way to get into real estate investment and should take some of the nerves out of it.
@Helen Brennick Simply paying off the credit cards will improve your credit score. Not sure how much, some of it depends upon what your limits are but depending on how many cards you have you’ll get a bump with each one that’s paid off.