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How to Build a Home With No Credit

by Lindsey Mastis
  • Overview

    Owning your own home is the American Dream. Incurring a lot of debt is the American way. When it comes time to build your dream home, it's not encouraging to learn you have poor credit. Loans are hard to come by with bad credit. You want to build anyway? There are steps you can take to build the home you want, without using your credit report. You will need a lot of cash, good friends and family to help you realize your dream.
    How to Build a Home With No Credit
    How to Build a Home With No Credit
 
  • Step 1

    Find someone with stellar credit to co-sign your loan. This tells a lender that someone with good credit is backing you up. If you fail to pay the loan, the credit company will collect from the co-signer. It may be difficult to find someone with good credit who is willing to co-sign the loan.
  • Step 2

    Pay with cash. You don't need a loan or any credit if you have enough cash on hand. When it comes to building a home, only pay your contractor after work is completed. You may have to pay your contractor in stages. Many contractors, vendors and others who work on building your house may even offer you a discount for paying with cash.
  • Step 3

    Get a loan from a close friend or family member. If you know someone with enough money to pay for your house, you could ask that person for a loan. Some family members are willing to help and will let you pay back the loan without interest. Be sure to get copies of the checks or receipts that show you have paid back the loan. Be clear about when you plan to pay the loan in full, and about payment schedules.
  • Step 4

    Find a program for first-time home buyers. Some states will offer classes for first-time home buyers. Some of these assistance programs will provide a few thousand dollars toward closing costs. Others will work with mortgage companies and banks to help you get a loan with poor credit.
  • Step 5

    Apply for housing through Habitat for Humanity. You will have to prove that you are in great need of this level of assistance. If chosen for a home, you will actually help build your house. You could also receive a no-interest loan that you will pay back in time.
  • 5
  • You may want to begin your journey by visiting with a credit counselor who can identify your options.
  • You may want to begin your journey by visiting with a credit counselor who can identify your options.
  • If you plan to borrow money from family or friends, note that it could place a strain on your relationship-- especially if you fail to pay the loan in a timely manner. It is best to write down details about the loan, payment schedule, and other pertinent information so you both know what to expect.
  • If you plan to borrow money from family or friends, note that it could place a strain on your relationship-- especially if you fail to pay the loan in a timely manner. It is best to write down details about the loan, payment schedule, and other pertinent information so you both know what to expect.

References & Resources