Fannie Mae rolled out changes this month for those that do not have credit scores. Prior to this update, borrowers with no credit score had to have their loan application manually underwritten and most investors would not accept these files. Now Fannie Mae has come up with an automated system to underwrite files with non-traditional credit. So if you do not have a credit score, it may be possible to buy a home now.
The requirements for those without a credit score are:
-10% minimun down payment
-owner occupied homes only
-maximum debt to income ratios of 40% (meaning your house payment and any other debt can't be more than 40% of your gross income)
-maximum mortgage amount of $417,000
-purchase and rate/term refinances only
-you must have two non-traditional trade lines and one must be housing related (rent, etc)
If you meet these criteria, you may be able to qualify for a conventional mortgage to purchase a home. The biggest hurdle will probably be the down payment, but for some this may be the answer they have been waiting for. This does not mean that if you have several collections but no credit score that you will be able to get financed. This is for someone that does not have any credit or possibly just opened a tradeline and has no credit score.
For those without credit, it may be easier to establish some credit than it will be to save up the 10% down payment. However, if you save money, this could be an alternative to getting into a new home.