Need help financing with poor credit score

[Nhia Yang]

Hi BP, I want to ask the experts on how to creatively finance my first property --- if you guys think I should do it now, or wait. First, my boyfriend and I found a quadruplex (1 unit is available, the others currently renting at $550/mo) built in 2006, been on the market for over 110 days, listed at $225,000. No HOA, but the seller/landlord currently pays for water/sewer averaging $65 total per month, tenants pay for their own trash and electricity. It qualifies for FHA and conventional loans.

After speaking with a local bank mortgage lender (I have 3 more meetings scheduled with 3 other local banks), he determines my credit score is too low (under 600, not from bad debt, but thin layer/little credit usage history). Whereas, my boyfriend's credit score is excellent (Equifax 798, Experian 748, and Transunion 819) but his income is too low. Hence, we don't meet the qualifications for conventional lending. Neither one of us has collections/debts, except for his student loans, we don't have any other loans. We are renting right now, so HELOC isn't a possibility, and we ruled out getting a cosigner too.

Right now, we are debating on whether to keep renting --- or, buy a home under his name via seller finance, FHA, Conventional, or even RD (rural development) housing that requires low down payments as first time homebuyer. We can put 15k down (only IF we have to) and still be okay financially. I figured instead of just renting, we can build equity in a home (via rent to own, or FHA/RD financing, live in the home for 1-2 years, and rehab it) as I build my credit score and find employment to increase our income.

I understand, conventional lending is not the only means of financing one's first investment property. A few exit strategies I've considered should we do buy a home: a) rent the home, b) rent-to-own, or c) resell it (although I rather not, I prefer buy-and-hold), while we purchase another multifamily property to live in. Or, we can wait until my credit score improves (could take 6+ months according to lender) then decide what to do next. I've also considered asking around for a personal or business loan to start real estate investing so I can build my credit simultaneously --- although I don't think it would work since my credit is under 600. Nonetheless, I don't mind being vulnerable/going the extra mile to make REI possible in our lives. If this means, I have to wait while working 2+ jobs, or taking personal loans now --- I'm willing and committed. I'm grateful and open to any suggestions you may have.