One of the most FAQs we get daily at GCA Mortgage is can homebuyers get 500 to 620 FICO home mortgage loans with bad credit? A large percentage of our clients at Gustan Cho Associates are homebuyers with bad credit that need 500 to 620 FICO home mortgage loans with bad credit. Over 75% of our borrowers are folks who could not qualify at other lenders. Gustan Cho Associates empowered by NEXA Mortgage, LLC NMLS 1660690 is licensed in 48 states. We have a national reputation for being able to do home loans other lenders can’t do. Gustan Cho Associates has lending partnerships with over 170 wholesale mortgage lenders. Most mortgage lenders have lender overlays on government and conforming loans. Lender overlays are mortgage guidelines required by individual lenders above and beyond the minimum agency guidelines of FHA, VA, USDA, Fannie Mae, and Freddie Mac.

Can I Buy A House With A 500 FICO Score?

It is much easier to get an AUS Approval on FHA loans than any other mortgage program for borrowers with less than perfect credit. Outstanding collections and charged-off accounts do not have to be paid to qualify for FHA loans. You can have prior bad credit, a prior bankruptcy and/or foreclosure, and a period of bad credit and qualify for FHA loans. This holds true as long as you have rebuilt and reestablished your credit. Timely payments in the past 12 months are key to getting an approve/eligible per automated underwriting system (AUS).

How Can I Fix My Credit Before Buying a House?
Fix Credit Before Buying a House

Lenders understand your credit can have hiccups when you lose your job and the income stream stops. However, most folks recover and reestablish themselves. Getting new positive credit is very important when you are rebuilding and re-establishing your credit to prepare to qualify for a home mortgage. Let’s be honest, not everybody has perfect credit. Life happens, and certain events will impact your credit scores such as loss of job, divorce, or medical emergency.

What Is The Lowest Credit Score For an FHA Loan?

HUD, the parent of FHA, allows borrowers with credit scores down to 500 FICO eligible to qualify for an FHA loan as long as they can get an approve/eligible per automated underwriting system (AUS). HUD’s mission is to promote homeownership to hard-working Americans and make the dream of homeownership become a reality for American families. FHA loans hands down have the most lenient mortgage guidelines than any other home loan program in the nation.

AUS and Manual Underwriting DTI Guidelines on 580 Versus 500 FICO

One myth about sub 580 credit score FHA mortgages is that they require a manual underwrite. That is simply not the case. Gustan Cho Associates have closed many approve/ eligible FHA loans With 500 FICO. The AUS system will simply factor in payment history, reserves, and credit score, the determine if we need to manually underwrite the loan

See our AUS BLOG for more details.

Why Lenders Have Overlays on 500 to 620 FICO Home Mortgage Loans 

Overlays on 500 to 620 FICO Mortgage lenders generally view lower credit score borrowers with bad credit as high risk. Therefore, lenders can have their own mortgage requirements which are higher than the minimum agency mortgage guidelines called lender overlays on credit scores. It is legal for a borrower who meets HUD guidelines and is eligible for an FHA loan to not qualify at a particular mortgage lender. Lenders can refuse borrowers for not meeting the lender’s internal lender overlays. Borrowers who meet agency mortgage guidelines can get denied by one lender but qualify at a different mortgage lender with no lender overlays.

Best Lenders For 500 to 620 FICO Home Mortgage Loans With Bad Credit 

It is not uncommon for lenders to require a 620 FICO credit score on an FHA and/or VA loan when the agency guidelines are substantially lower. Homebuyers can qualify for an FHA loan with credit scores down to 500 FICO with a 10% down payment. To qualify for a 3.5% down payment home purchase FHA loan, HUD agency guidelines require a 580 credit score. The Department of Veterans Affairs does not mandate a minimum credit score requirement. We have approved countless borrowers on VA loans with credit scores down to 500 FICO with bad credit. Gustan Cho Associates has no lender overlays on FHA, VA, USDA, and conventional loans. A substantial percentage of our borrowers at GCA Mortgage are folks who could not qualify for a mortgage at other lenders due to the lender overlays. We have closed

Why Choose Us at Gustan Cho Associates?

Why Choose Us at Gustan Cho Associates? Over 75% of our borrowers are folks who could not qualify at other mortgage lenders for one reason or another. Common reasons for borrowers transferring their mortgage loan file to Gustan Cho Associates were the following reasons:

  • Being told the minimum credit score to qualify for a mortgage at their company was 620 to 640 FICO on FHA, VA, and VA loans which is above the minimum agency guidelines.
  • Going through stress during the mortgage process for a lack of communication with the loan officer and/or processor.
  • Lender overlays on government and conventional loans.
  • Borrowers were told they do not qualify for a mortgage due to not being able to meet minor petty internal overlays such as no gift funds, overdrafts on bank statements, verification of rent, and requiring collection accounts and charged-off accounts to be paid off.
  • The lender downgrading the automated underwriting system findings to a refer/eligible and to manual underwriting on FHA and VA loans
  • Many mortgage lenders do not do manual underwriting
  • Getting conditioned multiple times over and over for the same and/or similar conditions of the conditional loan approval.
  • Getting a last-minute mortgage loan denial by the mortgage underwriter.
  • Not having non-QM and non-Prime loans available such as bank statement mortgages for self-employed borrowers, no-doc mortgages, asset-depletion mortgages, non-QM jumbo loans, non-QM loans one day out of bankruptcy, and/or foreclosure, ITIN loans, or other niche and/or alternative financing loan programs.
  • Mortgage rates are priced above industry standards with hefty discount points for low credit scores and/or other loan level pricing adjustments (LLPAs)

Traditional 500 to 620 FICO Home Mortgage Loans For Bad Credit

The best mortgage loan option for borrowers with bad credit on 500 to 620 FICO mortgage approvals for home purchases are FHA and VA loans. VA loans are only for eligible retired and/or active duty veteran borrowers with a certificate of eligibility (COE). FHA loans are the best 500 to 620 FICO mortgage loan program for first-time homebuyers, borrowers with collection and charged-off accounts, high debt to income ratio, and those with a mortgage loan denial after getting conditional loan approval. VA loans have no minimum credit score requirements or debt-to-income ratio caps. VA loans have no maximum loan limit. VA loans have lenient mortgage guidelines. Homebuyers can get 100% financing with no mortgage insurance requirement at competitive rates on VA loans. Gustan Cho Associates has no lender overlays on FHA loans for bad credit. The team at Gustan Cho Associates are experts on VA and FHA loans with credit scores down to 500 FICO with zero lender overlays.

Non-QM 500 to 620 FICO Home Mortgage Loans

500 to 620 FICO Mortgage Approval on Non-QM and Non-Prime Loans Non-QM and alternative mortgage loan programs are portfolio loans. Non-QM and Non-Prime loans benefit borrowers who do not meet traditional mortgage guidelines. Borrowers who need niche mortgage options such as no-doc loans, or bank statement mortgages for self-employed borrowers without income docs can now get approved for a mortgage with non-QM loans where they could not qualify otherwise.

Non-Prime Mortgages With No Income Documentation

Non-QM mortgages one day out of bankruptcy and foreclosure allow homebuyers to purchase and/or refinance a home without a mandatory waiting period requirement after bankruptcy and/or a housing event. Borrowers can qualify for non-QM loans with credit scores down to 500 FICO with no mortgage insurance requirements and no maximum loan limit. Non-QM jumbo mortgages, fix and flip loans, no-doc mortgages for primary homes, asset-depletion, non-warrantable condos, condotel financing, commercial loans, and bridge loans are all non-QM mortgage loan options at Gustan Cho Associates.

Low Credit Score Mortgage Lenders

From there contact Gustan Cho Associates directly at 262-716-8151 or text us for a faster response. Or email us at [email protected] One of our experienced loan officers will answer any questions you have. We will assign you to a licensed loan officer in your state! We are available to answer your question 7 days a week, mornings or evenings. We pride ourselves on being up-to-date with all mortgage guidelines. We are a full-service mortgage company licensed in multiple states without any lender overlays to get in the way. We look forward to helping you and your family. Please read our reviews! They speak for themselves! Get expert mortgage advice now.  USEFUL LINK: Non-Prime Jumbo Loans With 550 FICO