Buying a home is an important process in which you traditionally need to have good credit and some money saved up to put toward your purchase. However, not all homes are purchased with credit or with a large down payment, as there are many creative ways you can purchase your own home without going the traditional route. Here are some tips to help you as you start your home search when you don't have any credit to finance the purchase.
Look at Seller Financed Homes
One avenue of buying homes for sale that many buyers are not aware of is homes sold with the option of seller financing. When a seller has enough equity built up in their home, they have the affordability to provide a service to a buyer where they act as the bank in the purchase transaction. In this scenario, you as the buyer will work with the seller to submit a purchase offer and make payments to them directly. So instead of a bank making money off the interest in the purchase, the seller accepts your payments over time and also earns an interest rate on their loan to you.
Make sure you negotiate all the terms of the purchase and the mortgage loan agreement, including how much interest you pay to them is included with your payment, how much the payment is, and how long the loan terms will continue. For example, if you plan to make payments to the seller for the next five years—at which point you will be expected to pay off the rest of the mortgage in full—you can apply for your own financing at that point. After five years you would expect your credit to be better, providing you the ability to get a mortgage on the remaining amount of the loan. The seller would be able to provide you proof of your payments on the mortgage, which you can provide to the new mortgage bank to help you get a new mortgage.
Keep in mind you will need to look for homes specifically offering seller financing. Not all sellers may be willing or able to accept payments over time for their property.
Work With an Experienced Agent
Another good recommendation to help you buy a home without credit is to use the experience and services of a licensed realtor. You can find a real estate agent that has the experience and a load of knowledge on seller financing. They will be able to help you search for homes matching these criteria and also help you negotiate and complete the required documents to finalize the sale and mortgage loan paperwork. Contact a real estate agent if you go with the no credit financing option.