Can you buy a house in Portland with lousy credit?
By Janet Eastman | The Oregonian/OregonLive | Posted October 11, 2018 at 05:10 AM
Bad credit? No credit? No problem -- or so, many of those all-too-catchy loan ads promise.
But while you might be able to finance a used car with less-than-stellar credit, getting approved for a home mortgage when you have credit (FICO) scores dwelling deep in the cellar can seem like an infinitely steeper climb. An Everest-level climb, in fact.
Especially in Portland.
Realtor.com
But here's the shocker: It
can be done, particularly if buyers know where to score a
mortgage. That's where
realtor.com's penny-wise (but never pound-foolish) data team comes in. As it turns out, there are plenty of cities where a not-great
credit score -- say, well under 650 -- won't stand between buyers and their dream home. And yet, in other parts of the country, buyers are delusional if they think they're getting a mortgage without a nearly perfect score -- and boatloads of cash for a down payment. We located the top metros for both.
Realtor.com
So how do you snag a home mortgage without an excellent credit rating? It's largely a matter of what government loan programs are available in a specific area -- and those vary substantially. The U.S. Department of Agriculture, for example, sometimes offers no-money-down loans to borrowers whose scores are below 640 -- but only for homes in a rural ZIP code.
Federal Housing Administration loans, among the most popular government-backed mortgages, allow borrowers with credit scores as low as 500 to qualify with a 10 percent down payment. (They must have scores of 580 to get loans that require only 3.5 percent down payments.) But plenty of sellers choose not to accept them if they have other offers.
On the exclusionary side of the equation, home prices and market hotness play leading roles in keeping credit rating requirements high. Maybe too high if you haven't been tending to your credit like a weed-free garden.
"When you've got 25 offers on a house and you're the seller, you're more likely to take a cash buyer or a conventional loan with 20 percent down," says Courtney James, owner of Urban Durham Realty in Durham, NC. (Conventional loans, not backed by a federal agency, generally require a credit score of at least 620; anything lower than 650 is considered "OK," "poor" or "bad" by rating agencies.)
To find out where credit-challenged buyers live out the American ideal of homeownership, we calculated the share of mortgages in the largest 200 metros obtained with a 649 FICO score or lower. The share of mortgages was calculated over a 12-month period from July 2017 through June 2018. We limited rankings to one metro per state.
John L. Scott NE Portland via Realtor.com
First, the stats on the Portland metro market: The median list price for a residential property is $475,000, and with willing buyers and low inventory -- there are about 3,014 homes for sale now -- listings linger on the market for about 51 days if priced right. The median price per square foot is $246.
Here's an example: 2201 N.E. 61st Ave. in Portland's Rose City is listed at $475,000. The three-level Tudor-inspired house, built in 1931 on a 4,791-square-foot lot, has three bedrooms, one bathroom and 2,119 square foot ($224 a square foot) plus a covered deck, covered patio and basement space with media, playroom, storage and laundry, says Janet Rajcich of John L. Scott NE Portland
If you can't afford
$2,548 per month for principal and interest on a mortgage plus property taxes and homesowner's insurance after a $95,000 down payment for a $475,000 house, you might consider renting. If so, the median rent is $2,150.
Realtor.com
"The share of Portland metro area mortgages having a FICO score of 649 or lower from July 2017 to June 2018, consistent with comparables in this story, is 9.1 percent, which places it much nearer the markets where getting a mortgage with a low credit score is tougher than those where getting a mortgage is easy with less than stellar credit," says Realtor.com Chief Economist Danielle Hale. "This is a reflection of Portland's still relatively tight real estate market that is very competitive for buyers." (This photo shows 949 N.W. Overton St #705 in the Encore in Portland's Pearl District, which is listed at $475,000. The single-story contemporary condo, built in 2007, has one bedroom, one bathroom and 920 square feet [$516 a square foot], plus a large balcony with river views, deeded parking and storage, says listing agent Maria Shershow of Where.)
Realtor.com
Portland, Vancouver and Hillsboro's high credit score requirement is similar to the 8 to 10 percent range found in Asheville, NC; Austin-Round Rock, Texas; Boston-Cambridge-Newton, MA-NH; Cedar Rapids, IA; Charlottesville, VA; Denver-Aurora-Lakewood, CO; Fort Collins, CO; Honolulu (urban), HI; Los Angeles-Long Beach-Anaheim, CA; Minneapolis-St. Paul-Bloomington, MN-WI; Provo-Orem, UT; Raleigh, NC; Reno, NV; Seattle-Tacoma-Bellevue, WA; and Wilmington, NC. (This photo shows 5605 N. Denver Ave. in Portland, which is listed at $479,000. The two-level ranch-style house, built in 1954 on a 4,791-square-foot lot, has three bedrooms, two bathrooms and 1,824 square feet [$263 a square foot] with a finished basement that includes kitchen, full bath, and family room, says listing agent Anthony Pitre of Real Living The Real Estate Group)
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