Can I Get Denied For FHA Loan With Good Credit?
Can You Get Denied For FHA Loan With Good Credit?
Most home buyers think that you cannot get denied for FHA Loan with good credit. It is not just borrowers but many loan officers pre-approve borrowers just by looking at the borrower’s credit scores and income and figure there is no way that a borrower can get denied for FHA Loan with good credit. Over 70% of the borrowers who I represent are folks who either got denied or could not qualify with their lender. I have the utmost respect for these folks because they do not take no for an answer and either contact others or surf the internet and somehow get referred to me. The number one reason of stress during the mortgage process and/or last minute mortgage loan denial is because the loan officer did not properly qualify the borrower. Unfortunately, loan officers are human and can make mistakes but their mistakes such as not taking time to properly pre-qualify a borrower will not just affect the borrower, but the borrower’s family, the sellers, both the buyer’s and seller’s realtors, and everyone involved in the mortgage process.
Reasons For Denied For FHA Loan With Good Credit
Two main factors in qualifying for a FHA is meeting the minimum credit score requirements and having qualified income. To qualify for a 3.5% down payment home purchase FHA insured mortgage loan, the borrower needs at least a 580 FICO credit score. Borrowers also need to meet the minimum debt to income ratios. Borrowers rely on their loan officers to get pre-qualified and pre-approved. There should be no reason why a pre-approved borrower cannot close on their home loan. Unfortunately, that is not always the case and stress during the mortgage process and mortgage denials do happen. There is no reason why anyone should go through stress during the mortgage process and why a pre-approved borrower should not close on their loan. There are times where borrowers get denied for FHA Loan With Good Credit and here are the reasons why:
- There are many borrowers are told by loan officer of banks and mortgage lenders that they do not qualify for a FHA Loan because they had either one or more 30 days late payment on their debts on their credit report. For example, I just had a borrower call me this morning because she had a mortgage loan denial from a lender she went to due to a late payment May 2016. The loan officer told her that she cannot qualify for a FHA Loan until next May of 2017 just because of a 30 day late payment in the past 30 days. The loan officer from the other lender qualified this borrower by reviewing her credit, her income, and submitted the file for processing and underwriting. Once the borrower received her mortgage disclosures and signed the docs required and emailed it back, the mortgage loan package was registered and submitted to a mortgage processor. The mortgage processor then ordered the FHA Case Number and ordered the home appraisal. The borrower paid the $475 appraisal fee to the AMC, the appraisal management company, and thought everything was fine. The mortgage processor scrubbed the file and made sure that the file was complete as possible so once the mortgage underwriter issued a conditional loan approval, there would be very little conditions. The file was then submitted to underwriting and assigned to a mortgage loan underwriter for a conditional mortgage loan approval. The mortgage underwriter then issued a last minute mortgage loan for her having a 30 day late payment on her credit report from a Capital One Visa payment she missed her $25.00 a month minimum payment on. Again, the loan officer relayed the message to this borrower that the reason she was denied was because FHA requires on time payments for the past 12 months. However, this loan officer is wrong and told this borrower the wrong information. FHA does not have a requirement that all monthly payments need timely for the past 12 months. I have qualified countless of borrowers who had not just one 30 day late payments in the past 12 months but a few 30 day lates.
- Denied For FHA Loan With Good Credit: You can have great credit and high credit scores but if you had mortgage lates in the past 12 months, that can be cause for a mortgage denial.
- You can have great credit and high credit scores but if you have credit disputes, your mortgage process can come to a halt until the credit disputes are retracted. Retracting credit disputes will lower your credit scores.
- Credit Repair: Those who went through a credit repair program and got derogatory credit items removed will most likely have good credit. However, any public records removed off your credit report will get discovered because all mortgage lenders will do a third party public records search through Data Verify and/or Lexis Nexus.
If I Got Denied From One Lender Can I Qualify For FHA Mortgage With 30 Days Late In Past 12 Months With Another Lender?
You can have good credit with late payments in the past 12 months, so you cannot just assume that you qualify for a FHA Loan with good credit when you have late payments. Most lenders will not approve you for any type of home loan if you had a 30 day late payment in the past 12 months. Lenders understand that borrowers can have had periods of late payments due to extenuating circumstances such as periods of unemployment or medical issues but want to see that they no longer have financial issues and a good timely recent payment history is the best predictor of them being able to be timely with their mortgage payments going forward. However, one or two late payments is not a deal killer and there are lenders like myself that will approve borrowers with one or two late payments in the past 12 months.
Late Payments After Bankruptcy And Foreclosure
Lenders do not want borrowers to have any late payments after bankruptcy, short sale, deed in lieu of foreclosure, or foreclosure. One late payment after a bankruptcy and foreclosure can be an automatic mortgage denial from most lenders. Borrowers can have good credit and high credit scores with late payments after bankruptcy, deed in lieu of foreclosure, short sale, and foreclosure. Again, you cannot assume that just because you have good credit and high credit scores that you will qualify for a FHA Loan if you have late payments after bankruptcy and foreclosure. Good news is that some lenders like myself will consider late payments after bankruptcy, deed in lieu of foreclosure, short sale, and foreclosure. But there has to be a good reason for the late payments after bankruptcy or foreclosure.
If you had late payments after bankruptcy and/or foreclosure and are having a tough time qualifying for a mortgage, contact me at email@example.com or call or text me on my cell at 262-716-8151.