Do you need to have rental history to buy a house?
Rent prices in my area are through the roof, and I feel as though it would be much wiser to invest in property, such as a condo. Is it required to have had your own lease prior to buying a house, or how can you get around it?
7 answers
Kim’s Answer
As long as you have good credit, and income capable of supporting the payments, you should be approved. One thing I want to point out. If you are sure you want to reside in that particular city, this is fine. However, if you might relocate, please understand that it is possible to get "upside down" on a loan. This means that the value of the house drops, and you owe more on it than it is worth. For example, some new homes near me are selling for $225,000, but all the rest of the homes in this area are worth $85,000-$125,000, and there is nothing spectacular about the area. I would expect these new homes are actually "worth" $185,000 or so. It depends on housing availability and what people are willing to pay for them. If you buy a house for $225,000, and its value drops to $185,000, you now owe $40,000 more than it is worth. If you sell it, you won't be able to pay off what you owe on the loan, unless you can come up with another $40,000.
Although real estate tends to go up in value, and can be a good investment, this is not always the case. It is good that you are considering wiser ways to spend your rent money, but please be careful! And try to have money set aside to cover maintenance and repair costs. This is one step towards getting ahead, financially, as it lets you avoid having to borrow the money and pay interest to the bank.
Ron Simpson
Ron’s Answer
No, rental history is not needed. The important things are credit score, the higher the lower the interest rate you'll pay, and of course the ability to pay.
There are many "first time home buyer" programs available that vary by state. Start with your bank and get pre-qualified as many sellers won't consider an offer without pre-qualification.
Work with an experienced Realtor, even if you're considering a new house as opposed to resale. They should know all the programs that would specifically benefit you.
X’s Answer
Like others have said, your credit score and ability to pay are the primary factors. If you don't know your credit score, you can sign up with a service like creditkarma.com. Some credit cards will also provide your FICO score as part of their member services (I have cards with Barclay Bank and Bank of America that allow me to keep tabs on my credit score).
Jess’s Answer
You need to have good credit in order to receive a loan from the bank - and some cash to contribute to 10-20% of the down payment as well I believe!
Brian’s Answer
It always helps to have a good rental history but it is not mandatory. Make sure that any credit you obtain whether it is a car loan or credit card etc that you always pay on time. A lender will look at how you have paid your past bills. Another important factor is to not go out and get lot of credit cards and charge all these up to the maximum. If you have credit cards try to keep the balances very low and keep the majority of them paid off if possible.
Try to save as much as you can as the more down payment you can put forward. If you can put 20% down payment it will save you from having to pay mortgage insurance. If you can do all these things it will help you to qualify for a better interest rate which will make your monthly housing payment lower. Good luck!
Jordan’s Answer
Hello-
Purchasing a home does not require a rental history. Generally you will need to apply and be approved for a home loan which will require credit history, which rental history can at times be included in as far as payment confirmations. You will also want to be sure you have saved up a sufficient down payment.
If you are interested in investing in a home as opposed to renting, I would encourage you to reach out to a Realtor. They will be able to help you not only in finding a place to live, but are often times also willing to help navigate through mortgages, insurance, etc.There are also currently many offers available to first time home buyers!
Good luck to you!
Jeremy’s Answer
No. You do not need to have a rental history to buy a house. It is fairly common that a person (first time homebuyers, usually) live with family rent free prior to purchasing a property. Not having a rental history does not affect anything in terms of the mortgage application, required down payment, and the like. The key factors in getting approved for a mortgage to purchase a home are your credit & credit scores that show on your credit report, job/income (history and current), and the amount of assets you have to put down at closing. I hope that helps and good luck!