Qualifying For Bad Credit Mortgage Loans With Collections

This BLOG On Qualifying For Bad Credit Mortgage Loans With Collections Was UPDATED On July 29, 2017

A substantial percentage of consumers fell victims to the 2008 real estate and credit meltdown and devastated their credit and many were forced into bankruptcy.

  • Million of Americans lost their jobs and businesses. 
  • The recession is supposedly over but the economy is not recovering as well as it should. 
  • The real estate and credit meltdown of 2008 was more of a repeat of the Great Depression. 
  • Millions of Americans lost most of the equity in their homes. 
  • Others were left with mortgage balances where it was higher than the value of their homes.
  • Those who retired were forced back to the work force. 
  • Bankruptcies and foreclosures soared to historical highs.
  • The words Short Sale, Deed In Lieu, Bankruptcy and Foreclosure, became household names. 
  • Prior to 2008, not too many people knew of folks who have filed bankruptcy or had a foreclosure. 
  • However, after the Great Depression of 2008, every American knows of folks who have filed bankruptcy, short sale, or had a foreclosure.

Recovery Of Housing And Credit Markets

Now since the economy is slowly recovering, home sales are back active again due to major changes in mortgage regulations and laws. FHA insured mortgage loans is the most popular loan program in the U.S. today. HUD, the parent of FHA, insures FHA Loans originated and funded by banks and private lenders in the event of borrower default. Bad Credit Mortgage Loans With Collections and outstanding charge off accounts is now possible with FHA Loans.

  • The FHA mortgage loan program Bad Credit Mortgage Loans With Collections without having the borrower pay off outstanding collections and charge off accounts.
  • Mortgage loan applicants who have had a prior bankruptcy and foreclosure are able to be homeowners again after meeting the mandatory waiting periods.

FHA Bad Credit Mortgage Loans With Collections

I specialize in Bad Credit Mortgage Loans With Collections and no lender overlays.

  • Everyone who has a 580 credit score and stable full time income can qualify for FHA Loans.
  • Maximum debt to income ratio to qualify for FHA Loans are 46.9% front end DTI and back end DTI of 56.9% to get an approve/eligible per Automated Underwriting System Findings for borrowers with 620 credit scores or higher.  
  • Mortgage Loan Applicants with under 620 credit scores are limited to 43% DTI to get an approve/eligible per AUS FINDINGS.

Minimum Bad Credit Mortgage Loans Requirements

Here are the following minimum requirements for FHA bad credit mortgage loans with collections:

  • Bankruptcy: 2 year waiting period after the discharge date of Chapter 7 bankruptcy. 
  • This is a Federal guidelines and there are no exceptions.
  • Home Buyers can qualify for FHA Loan one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval.
  • There is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for FHA Loans.
  • Foreclosure: 3 year waiting period from the date of the sheriff’s sale or the date the borrower’s name was transferred out of their name into the bank’s name.
  • Short Sale or Deed in lieu of foreclosure:  FHA mortgage loan guidelines will treat a short sale or deed in lieu of foreclosure as a regular foreclosure. 
  • However, a home buyer can qualify for a conventional mortgage loan after 4 years of a short sale or a deed in lieu of foreclosure if they can put a 5% down payment.
  • 580 FICO credit score minimum for 3.5% down payment FHA Loan.
  • Borrowers have credit scores between 500 and 579 FICO will be able to qualify for a FHA mortgage loan but need to have a 10% down payment. 
  • 620 minimum credit scores will qualify you for a 3.5% mortgage loan with much favorable mortgage rates.
  • Closing in 15 days.
  • Non-traditional credit accepted.
  • Home sellers can contribute a seller’s concession up to 6% towards home buyer’s closing costs including taxes, insurance, and mortgage insurance premium.
  • The Gustan Cho Team only offer pre-approvals and not pre-qualifications. 
  • All pre-approvals are based on Fannie Mae’s Automated Underwriting System DU.
  • Fixed rate mortgages and adjustable rate mortgages without pre-payment penalties.
  • Can flip residential homes into FHA mortgage loans without 91 day waiting period.
  • 580 minimum credit score for 2 to 4 unit residential properties.
  • Gift for down payment does not have to be a family member. 
  • As long as it is a close friend who you have known for at least 5 years, it is alright.
  • Available after hours and available 7 days per week.
  • FHA Loans manufactured homes available.

Mortgage Loan Borrowers who need to get qualified and pre-approved, please contact us at 262-716-8151 or email me at gcho@gustancho.com.  Our viewers can also subscribe to our daily mortgage and real estate newsletter at www.gustancho.com .

Related> Bad Credit Mortgage Loans: Under 580 Credit Scores

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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