Real Estate the Ramsey Way - This Is How You Buy a House Without a Credit Score

Episode Date: April 6, 2026

From buying a home without a credit score to dealing with an unexpected HOA fee, we walk through real-life housing decisions and what to do next. Next steps: 🏠Not sure what to do next when buying or selling your home? Check out our ⁠⁠Real Estate Home Base⁠⁠ for free tools and resources to guide your next steps. 🏠And if you’re ready to buy or sell your home, ⁠⁠connect with a RamseyTrusted® real estate agent⁠⁠. They’re experts who’ll help you confidently navigate homeownership the way we teach. Explore more from Ramsey Network: 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💰 George Kamel 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy

15 years ago, I was in a bad place, lots of debt more than I care to admit. But thanks to you and your team over the past 15 years, my wife and I are now in Baby Step 7. I've been on the debt-free stage. I've been on the cruise, been to your place, and we're Baby Steps Millionaires. Why, I'm proud of you? All you guys have done. Good for you, man. Along the way, we've raised our kids to be Ramsey kids, I guess.

And so my oldest son, he's been married now for about a year. He and his now wife have been through the high school curriculum. They went through Financial Peace University during their marriage counseling. No debt. Cashload College vehicles, everything, no debt. And they've just gotten approved for their first mortgage to buy a home, very reasonable house. And they've got $30,000 to put down. and the mortgage lender kind of threw us a curveball the other day,

and she told them if they would take $5,000 and put it in an account and use that to secure a $5,000 note and pay it for six months, that would give them some credit and potentially lower their rate by up to 1%. And I guess I know the answer. You're being overcharged. Okay. If you go to Churchill mortgage and they do math, manual underwriting, there will not be a difference in the rate.

Okay, well, we're actually waiting on Churchill's proposal to come back now. Yeah, they can do manual underwriting, no credit required. You're saying the kid has absolutely no credit at all. Zero credit. Perfect. Yeah. Okay. So, man, is he had a job?

He does, yeah. They both have a job for a year now, both have good jobs. She's a school teacher. He's an engineer. They've been paying rent during that time? They have, yeah. And they have $30,000 to put down? Yes.

There's no rate difference whatsoever. Great. So the mortgage lender that you have is incorrect for whatever reason. I'm going to be gentle. Okay. All right. Well, that's good. Like I said, she has applied at Churchill, and she's waiting on that information to come back.

But that kind of threw me a curveball when I heard that. Yeah. Hang on. I'll have Christian pick up, and we'll make sure our team holds their hand and connects them into Churchill because I don't want them to do this other deal. I want them to get a good manual underwriting mortgage loan. We do it all the time and have for decades with no credit at all. There is no interest rate difference. And so this lady at a minimum is not, just does not know how to do it. And so you need to get away from her. It's that simple. So Ken, George Camel,

and Whitney bought their first house that way. Totally. Several. John Deloney. bought his house that way. Lots of other people, thousands and thousands and thousands of others, but a lot of mortgage companies don't know how to do it. And I don't know what kind of hook or crook. This lady's trying to pull here, but it's scary. They don't want to do it either. They don't want to screw with it.

But yeah. And so what manual underwriting is before, see, I got my real estate license in 1978. Before there was a FICO score. the banks actually used to do an analysis of the individual in detail to figure out if they could pay the freaking bill. It's called underwriting. And so they would send out, when I would write a contract in 1978, 1988, 1982, they would mail out a VOD, a verification of deposit to the local bank. And the bank would verify that the $30,000 is in the bank. They would mail out a VOE, snail mail, a verification of employment to their employer.

and he would send back this how much they make is how long they've been working here and they would send they would mail out uh to any creditors uh landlord and get a uh a record on how they actually paid their rent that's called underwriting alone and you're doing an analysis of the person's life to see if the indications are that they can pay the bill you have their income you have their track record with their rent you have their down payment verified you do all of those things and that's how loans used to be written and then along comes fico and VICO's like a monkey can make this loan. It's like they look at the number and go, who, who, you've got the loaner, who, who, you don't

have the loan, right? And so the mortgage business has been dumbed down to where people like this lady is telling this guy to go get a stinking secured loan with her company so she can create a credit score so she can go, ooh, who got the loan. It's exactly what has happened here. And so it's just dumb. but this is the ridiculous thing of FICO. And so FICO has got way too much power.

It's not that accurate to start with. And so, but Churchill mortgage and a few other mortgage companies actually know how to do manual underwriting, which doesn't matter if you don't have a FICO score. This kid does not have a FICO score because you can't have a FICO score if you don't borrow money. It's the only way you can get a FICO score. FICO score measures how much money you've borrowed. how you paid it back, what type of money you borrowed, and how quickly and all that kind of stuff. It's an I love debt score.

So if you don't love debt and you haven't borrowed any money and you don't have any open accounts for a year, your FICO score will just disappear. I haven't had one for 30-something years. And so apparently I'm not here. I'm not real. I'm a hologram because I don't have a FICO score. What? Yeah, what?

Look at me. I pay cash for stuff. It's crazy. and so that that's go to a mortgage company like a Churchill mortgage that can do manual underwriting if you have no credit zero credit now if you got bad credit that's a different problem like you haven't paid your bills on time for two months or two years you've got a different issue then but zero credit is a wonderful place to be and you get the exact same rate as someone with that's stupid enough to have an 800 FICO score which

means you paid the bank sometime or another 100 grand in interest because you've been paying and paying and paying and paying and paying and paying and paying and playing their game playing I love debt score game ding ding ding ding ding ding ding and that that's what people get into so this kid is second generation yeah and doesn't have a fico school that's so cool it's cool well I mean again dad starts paying attention to the ramsie ways and when you're raised up in that 15 years some of that sticks right he's a millionaire he's a millionaire so the son gets it But see, this is the whole thing. You mentioned the word game.

It is a game. These banks, they understand what they're doing. They need you paying interest. That's where they make their money. So it's a game. So we're going to create this system that everybody needs to play ball by. Hey, guys, thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house.

It's exciting. And one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent. who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com slash

trusted agent. That's ramsysolutions.com slash trusted agent. Me and my wife just bought a house in August and turns out that the HOA has about a million dollars in deferred maintenance. Their solution is to do a $5,000 special assessments and then hopefully increase dues going forward. We're wondering if it's a good idea to stay or maybe try and cut our losses and get out of this situation. Wow. That's pretty aggressive. over a one-time $5,000 fee. What do you know that we don't? The couple things is the total amount to get back to zero would be a $20,000 fee. Okay, so there might be more assessments in the future.

There might be more in the future. And then we live in a high-fire zone, high-fired into community in 50-year-old houses. We lost our HOA coverage this year, and we are being covered by access insurance. And we're expecting that to probably go up. to almost 75 cents of every dollar that comes in produce. Was this disclosed to you, Tommy, when you guys bought? When did you say you bought just, like in August? What did you say? In August, yeah.

Yeah, yeah, yeah. There was nothing to disclose. At best, we maybe could have dug into the documents and found it, but the H-A. is not in very good shape. Well, do you like where you live right now, aside from these fees? We really like the house. But, yeah, we're just concerned about the money. It was mentioned that the HOA, if this does not pass, which is a community vote, we could head towards bankruptcy as a community.

Yikes. Okay, what's the HO fee now monthly? And what will it go up to? $340 a month. And then there's no consensus about the raises would be. The documents are extremely limited to 3% a year. but that's not enough to keep up. Okay.

Well, the bad news is you've got to pay this $5,000 assessment no matter what. Even if you sell, it's going to come out. And so you're not going to get out of that. So what you're really asking is, is it worth it to live here long term, knowing it's going to get more expensive to live here? Yes. Yeah, what's your mortgage payment percentage-wise to the income you guys bring home? Just shy of 30%.

Just shy. Okay, okay. and because these dues, you know, the HOA and insurance and all that, we kind of wrap into our 25% rule of what your percentage should be from a mortgage standpoint to income. So I'm wondering as these start to notch up, if you start to get to be, yeah, over 30%, 35%, I mean, all of that, then there gets to a point that you can't afford to live there anymore, right?

But I feel like that would take a lot in order for that to continue to raise. I just factored in just the mortgage. If I were to factor everything else in, it would be closer to 40% currently with the HOA insurance. Is there room for your incomes to grow? There is. Okay. I would hold off personally. I don't think this is like we've got to get out right now.

I would hold off since you enjoy where you live. This is just a part of living in society, unfortunately, and HOAs get a lot of hate for a valid reason. and assessments are part of the annoyance. You're like, I already pay so much to live here. Now you're just going to throw five. It's like the mafia. It's like give us five grand or else. And you have no way out of it.

And so long term, if you see the writing on the wall, if three years from now your income hasn't gone up, and yet all of your dues keep going up, the assessments keep showing up, that could be a sign, hey, it's time to move. But the longer you wait, the better off you are ROI-wise on this purchase of the home. The sooner you sell, the more of a loss you're going to take.

Because you've got to pay. realtor fees and you probably don't have much appreciation at this point. So this could be way more than a $5,000 loss just to get out. Yeah. We were estimating $25,000 loss to get out. Yeah. So I don't want to, you know, eat $25 grand to save $5. And I think you're going to know a lot in 12 months, right? After a year, I just, I think that a lot will kind of shake out and you guys will kind of see where you're at. And then to your point, George, you could look up, you know, and say, okay, let's stick it out for another year. Let's see where you're incomes are at that point, see what the HOA's doing, you know, and you can make, you can make the call,

yeah, in three years or so, but I probably wouldn't go any less than three just because of everything attached to it fuel-wise. And if you want to live in a non-H-O-A community, you're going to have to go probably further out, and it may not be a home that you love. And so this is a trade-off of living where you want to live. H-O-A's are everywhere.