Although experts recommend you have a credit score of 700 or higher to get the best interest rates on a home loan, you can still qualify for a mortgage backed by the Federal Housing Administration with a score as low as 500. But what if you don't have any credit at all? It may still be possible to get a mortgage with little tono credit. Here are two options for making this happen.

Apply with Specialty Lenders

Conventional banks always require applicants to have a credit history to be considered for a loan. This is understandable since the bank is loaning hundreds of thousands of dollars and wants to make sure it'll get its money back. However, you may have better luck with smaller lenders who are willing to take a chance on someone with no credit.

This group includes an assortment of organizations. For example, credit unions may be more forgiving when it comes to credit requirements, especially if you've been a customer of theirs for years. Another possibility is to apply for a loan with the Federal Housing Administration.

As mentioned previously, you need a minimum credit score of 500 or better. However, the agency does have guidelines that let it evaluate people's credit history in non-traditional ways. In this case, you will need a minimum of 3 alternative credit references, and the agency prefers these references be from a landlord and/or utility companies. It will also accept references from insurance providers, specialty stores such as rent-to-own companies, and similar places that document your payment history. As long as you have been paying on time at these places, the agency may underwrite your loan.

Lastly, there are a number of specialty mortgage companies that offer loans based on other factors, such as your income. With any of these options, though, you may be required to pay a higher down payment or get mortgage insurance. It's essential you discuss this with the lender so you know what you're getting into.

Consider Seller Financing

Another option for buying a home with no credit is to have the seller finance the purchase. In this case, you would make payments directly to the homeowner for a period of time and then make a large payment at the end of the contract. Sellers typically ask to see credit reports, but you may find someone willing to give you a chance.

You should know, though, the seller's name remains on the deed until the home is paid off. Additionally, sellers tend to charge higher interest rates than a bank, as much as 7 to 8 percent. Still, this could be a good way to buy some time to establish your credit so you can qualify for a regular mortgage when it comes time to make the balloon payment.

For more information about getting approved for a home loan with no credit, contact a lender near you.