In order to get a traditional loan at the best interest rate, a lender will check your credit report. Your credit report tells the lender how much outstanding debt you have and whether you have a history of paying your bills on time or paying them later. However, many people are foregoing obtaining credit cards and taking out loans for cars. These people may have no credit history or very limited credit history. If you have a limited credit history and you want to buy a home, you may wonder what your options are when it comes to financing a home. Here are a few of the options you have for financing a home without an established credit history. 

Establish Your Credit

One of the best ways to finance a home when you currently have no established credit is to take the time to establish your credit. Open up a credit card a year before you intend on filing for a home loan. Use it monthly and pay it off monthly. If possible, consider having your parents or sibling add you as a co-signer to an established credit card that they have. This can raise your score and show an established card on your credit report. 

Have a Large Down Payment

If you are in a hurry to get a home loan, you may not have time to establish your credit. If this is the case, another way to get financing is to have a large down payment. Many lenders will overlook your lack of credit history if your income is high enough and you have over 20 percent cash available for a down payment. 

Get No Credit Financing

The final option for obtaining a home mortgage with no or limited credit is to find no credit financing. Some lenders offer financing options that do not rely heavily on your credit score. An FHA loan is the most well-known type of a no credit loan, but there are other options out there. 

If you are thinking about buying a home, you should meet with a lender ahead of time. The lender can sit down with you and help you determine what will be needed for you to obtain a home loan. Most experts recommend that you meet with a lender  one to two years prior to obtaining a home loan so you have time to makes changes or improvements that can help you. If you are looking to obtain a home loan and have a limited credit history, contact a lender (such as SWE Homes) today to find out the best options for your situation.