Every month I encounter buyers who are looking for Minnesota first time home buyer programs that can accommodate someone who has not established any credit. In this case, when I pull up the credit report there is literally no credit at all on the report. While almost all programs today require a borrower to have established at least some credit, the Minnesota Housing Finance Agency can help you with their MMP or CASA first time homebuyer program which has a no credit
How to Get a Loan With No Credit in Minnesota
In order to use the program with no credit on a credit report we need to build a non-traditional credit report through other means. For example if you have been renting a property with your name on the lease, you have been building credit in a non-traditional method. While the landlord does not report your payments to the credit bureau, evidence of your timely payments can be verified through our credit bureau and added to a special credit report used to obtain the MMP or CASA loan.
We need to find at least three ways that you have been building credit and at least one of them has to be rent. Other means can include items such as monthly car insurance payments, electric bills, water bills, cable bills, phone bills, etc. Basically any bill that you pay for on a monthly basis has the potential to be used to build this non-traditional credit report.
Of course, it’s important that any of these creditors report that you have been making your payments in a timely manner. Since building a non-traditional credit report for a buyer with no credit is a non-standard method, even one late payment can be a problem for an underwriter. The most important payment history is what has transpired over the last twelve months as many creditors don’t respond beyond that period of time. Additionally, a creditor that reports less than twelve months of payments won’t be used in the underwriting process.
It is also important to note that if we are going to be able to approve a buyer with no credit in Minnesota it’s important that you do not have negative credit either. For example if you have collections or judgments on the report, this can become a problem even if they have been paid.
The only way I can tell if we can help a buyer who has no credit on their credit report is to start a no-cost, no-obligation preapproval process. This can be as simple as a phone call in which I take your application information and discuss your financial situation with you. In this discussion I’ll ask about your income, assets, debts and means to build a non-traditional credit report.
No Credit Downpayment Assistance in Minnesota
If we utilize the MHFA CASA program you might also qualify for the HAF down payment assistance which presently is good up to $4,500 towards your down payment. If we use this in combination with seller paid closing costs it’s possible that a borrower might qualify using very little of there own money for cash required to close.
No Credit Loan Programs in MN
If you find yourself in this situation, wanting to buy a home in Minnesota but having no credit, please call me to discuss the possibilities. We will compare your current situation with the loan program parameters of Minnesota Housing Finance Agency’s MMP or CASA program and see if we can meet the terms of the program.