Chicago Home Loan With Bad Credit
In this blog, we will discuss and cover qualifying and getting approved for a Chicago home loan with bad credit. For those who were victims of the Great Recession of 2008 and have gone through a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, lost their homes, lost their jobs, or just had their credit suffered, there is hope. The recovery of the Great Recession of 2008 has taken the longest in U.S. History. However, the Chicago and Illinois housing market is hot and many can qualify for Chicago Home Loan With Bad Credit.
Chicago Housing Market
There are six counties in the Chicagoland Area:
- Cook County
- Lake County
- Du Page County
- Kane County
- Will County
- Mc Henry County
Chicago Home Loan With Bad Credit Mortgage Lenders
2022 brings some great residential mortgage loan programs for homebuyers seeking a Chicago home loan with bad credit. Homebuyers who have been turned down from their local bank and/or credit union. This is because of bad credit or due to their lender overlays, Gustan Cho Associates is the lender of choice. Borrowers with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, open unsatisfied collections, charge offs, late payments, or other credit issues can now qualify for mortgage loans at Gustan Cho Associates. Gustan Cho Associates can help. We are a mortgage company licensed in 48 states with over 160 lending relationships with wholesale lenders. GCA Mortgage has a national reputation for its no lender overlays on government and conventional loans.
Homebuyers Can Qualify For a Mortgage With Credit Scores Down To 500 FICO
GCA Mortgage Group has a national reputation of helping homebuyers who are seeking a Chicago home loan with bad credit. Most buyers, especially first time home buyers, are under the belief that great credit is needed to qualify for a home loan. First Time Home Buyers also believe that a large down payment is required to qualify for a Chicago home loan. That is not the case at Gustan Cho Associates Mortgage Group. Our team of loan officers at Gustan Cho Associates specializes in helping families realize the dream of homeownership becoming a true reality.
How Is It Possible To Get Mortgage When Bank Turned Me Down?
Banks and credit unions have tighter mortgage lending guidelines. To qualify for Chicago Home Loan With Bad Credit it is best to consult with a direct lender with no overlays. Over 75% of our borrowers are folks who have been turned down by other lenders such as banks, credit unions, and mortgage bankers with overlays. Many mortgage lenders like banks, credit unions, and mortgage bankers have mortgage lender overlays. Gustan Cho Associates are experts in helping borrowers qualify for Chicago Home Loan With Bad Credit.
What Are Mortgage Lender Overlays?
FHA, Fannie Mae, Freddie Mac, VA, USDA, have minimum federal mortgage guidelines. Fannie Mae and Freddie Mac are two government-sponsored enterprises that set the standards for Conventional Loans. Let’s take a loan scenario example on what mortgage guidelines are:
- The Federal Housing Administration does not require borrowers to pay off outstanding collections and charge offs
- The minimum credit score to qualify for an Illinois FHA loan is 580 with a 3.5% down payment
- However, a bank or other lender can have their own guidelines and rules that exceed the minimum agency guidelines
- USDA minimum mortgage lending guidelines such as requiring a higher credit score such as 580 but most lenders require a 640
- Lenders can and often do require borrowers to pay off existing outstanding collections and charge off accounts even though HUD, the parent of FHA, does not require it
HUD allows up to a 56.9% debt to income ratio and no greater than 46.9% front-end DTI to get an approve/eligible per Automated Underwriting System approval.
Agency Guidelines Versus Lender Overlays
But lenders can set their own standards which can be significantly lower:
- Most lenders have DTI Overlays capped between 45% to 50% on FHA Loans
- FHA does not require rental verification for most mortgage loan applicants unless automated findings conditions for VOR but some lenders may require it
- If you are seeking a Chicago home loan with bad credit, the best way to go about it is to seek a lender with no investor overlays
- We specialize in helping borrowers who are seeking a Chicago home loan with bad credit
- GCA Mortgage Group does not believe nor associate with investors with Overlays
- As long as our borrowers can meet federal mortgage lending guidelines and get automated approval, we are good to go and the loan will get approved and CLOSED!!!
- There are countless of our borrowers who have been turned down by multiple mortgage lenders and came to us and we were able to help.
Here are a few Testimonials
Who Can We Help Qualify For Chicago Home Loan With Bad Credit
As long as borrowers have qualified income, we can help you get mortgage approval and close on your dream home. Homebuyers can qualify for mortgages with prior bankruptcies, foreclosures, short sales, and other types of bad credit. Outstanding collections and charge-off accounts do not have to be paid in order for borrowers to qualify for Chicago Home Loan With Bad Credit. Borrowers with outstanding judgments and tax liens are eligible to qualify for FHA Loans under the following conditions:
- Be able to pay the outstanding balance prior to or at closing
- Have a written payment agreement with the judgment creditor if they have outstanding judgments or IRS if they have an outstanding tax lien
Three months of payment history on the above is required and borrowers cannot pre-pay the three month’s worth of payments in advance.
Credit Repair To Qualify For Chicago Home Loan With Bad Credit
Many of our borrowers are folks who have bruised credit and may be in need of credit repair. Many of our borrowers are folks who are just told NO by banks and other lenders because they currently do not qualify but can qualify in a matter of a short period of time. Again, there are minimum credit requirements to qualify for loan programs.
Here are the minimum credit qualification requirements for loan programs:
- FHA requires a minimum of a 580 credit score for a 3.5% down payment FHA loan
- Borrowers with credit scores between 500 and 579 FICO can qualify for FHA loans but a 10% down payment is required
- Most VA lenders have lender overlays on VA loans
- We help many borrowers with credit scores down to 500 FICO get approved on VA loans
- Fannie Mae and Freddie Mac require a 620 credit score to qualify for Conventional Loans
Gustan Cho Associates has Jumbo Loan Programs down to a 600 credit score.
Credit Disputes During The Mortgage Process
Borrowers cannot have credit disputes during the mortgage process unless they are medical collection account disputes or non-medical item disputes with zero balance. FHA will allow up to $1,000 in outstanding non-medical collection accounts overall to be in credit dispute without having to retract it. However, credit scores will drop when the disputes are retracted. Borrowers who have their public records such as bankruptcies and/or foreclosures removed from their credit report through credit repair will have issues when lenders run third-party public records searches during the mortgage process. All lenders will run third-party national public records search through Data Verify, Lexis Nexis, or other third-party servicers. Removing collections, late payments, charge-offs will not be a problem but borrowers will definitely have issues when public records get deleted from their credit report.
Minimum Mortgage Lending Guidelines
We have no mortgage overlays on government and Conventional Loan Programs. As long as the borrower is approved/eligible per DU FINDINGS and/or LP FINDINGS and the borrower can meet the automated approval conditions, there should be no issue with closing the loan.
Here are the basic mortgage lending requirements:
To qualify for a 3.5% down payment FHA Loan loan on a home purchase, the minimum credit scores require is 580 FICO. For those with credit scores between 500 to 580 FICO, a 10% down payment is required. Borrowers with credit scores lower than 580 FICO and cannot put 10% down payment, we will help get credit scores over 580 FICO to qualify for a 3.5% down payment purchase a home loan
- Collection accounts with open unpaid balances do not need to be satisfied
- By paying off old collection accounts, consumers will be re-activating old collection accounts which will drop credit scores
- There is a two year waiting period from the discharge date of bankruptcy to qualify for an FHA loan After Chapter 7 Bankruptcy discharge date
- Borrowers can qualify for FHA and VA loans one year into their Chapter 13 Bankruptcy Repayment Plan
- There is no waiting period after the Chapter 13 Bankruptcy discharged date on VA and FHA Home Loans
Prior foreclosure and/or deed in lieu of foreclosure:
- There is a three year waiting period after the recorded date of the foreclosure and/or deed in lieu of foreclosure to qualify for an FHA insured 3.5% down payment loan
- Fannie Mae and Freddie Mac allow Conventional loan borrowers to qualify after meeting a four-year waiting period after a deed in lieu of foreclosure or short sale
- To qualify for a 3.5% down payment purchase FHA insured residential mortgage loan after a short sale
- There is a 3 year waiting period after the date of the short sale which is reflected on the HUD settlement statement
- Fannie Mae and Freddie Mac require a four-year waiting period after a short sale for borrowers to qualify for conventional loans
Judgments and tax liens:
- Many mortgage lenders will flat out reject if they have an unsatisfied judgment or tax lien unless you can pay them off prior to the loan application
- However, we can help borrowers get a mortgage loan with unsatisfied judgments and tax-liens
- So our borrowers can get a payment agreement with the judgment creditor and/or the Internal Revenue Service
- Need to provide three months canceled checks that have been paid to the judgment creditor and/or IRS or have the judgment and/or tax lien paid in full at closing
Gaps in employment:
- Borrowers can have gaps in employment in the past two years and still qualify for a residential mortgage loan
- Borrowers who have been unemployed for six months or less only need 30 days of paycheck stubs with the new employer to qualify for a residential mortgage loan
- Borrowers who have been unemployed for six or more months need to be on the new job for at least six months to qualify for a residential mortgage loan
Little or no income:
- Borrowers who cannot document income because they are self-employed or work for cash can still qualify for a residential mortgage loan as long as they can get a non-occupant co-borrower
Recent late payments:
- Lenders have no issues with prior bad credit and/or open collections
- However, they do want to see a history of timely payments in the past 12 months
One or two late payments in the past 12 months are not deal breakers with an approve/eligible per automated findings.
Chicago Home Loan With Bad Credit: About The FHA Back To Work Mortgage Program
The United States Department of Housing and Urban Development, also known as HUD, has launched the FHA BACK TO WORK EXTENUATING CIRCUMSTANCES DUE TO AN ECONOMIC EVENT mortgage loan program on August 15, 2013. The FHA Back to Work Extenuating Circumstances due to an Economic Event mortgage loan programs shortens the waiting period to a one year waiting period after a person has had a bankruptcy discharge, had a foreclosure, deed in lieu of foreclosure, or short sale. However, the mortgage loan applicant needs to be qualified in a sense that they needed to have been unemployed and/or underemployed for at least six months and had a reduction of their household income of at least 20% and this economic event had led them to file bankruptcy or was the reason for them to have gone through the foreclosure, deed in lieu of foreclosure, or short sale. The FHA Back to Work mortgage loan applicant needs to have re-established their credit since the economic event and not have had a single late payment. The FHA Back to Work mortgage loan applicant needs to have completed a one-hour HUD-approved housing counseling course and the mortgage application process cannot start 30 days after the housing certificate date of completion. The FHA Back To Work Program has been discontinued.
Chicago VA Loans With Bad Credit
VA Loans are the best mortgage programs but are limited to veteran borrowers with a certificate of eligibility. Gustan Cho Associates are experts in the origination of Chicago VA Loans with bad credit.
VA Loans With Bad Credit Loan Programs
Gustan Cho Associates has no lender overlays on VA loans. The team at Gustan Cho Associates has helped thousands of homebuyers close on their VA loan with credit scores down to 500 FICO.
Here are some of the main bullet points of VA loans:
- 100% financing
- 100% loan to value on VA Loans
- No minimum credit score requirements on VA loans
- No maximum debt to income ratio cap with an AUS approval
- Manual underwriting
- Minimum credit scores down to 500 FICO.
- Veterans under 580 FICO may qualify with compensating factors
- 4% sellers concessions allowed on VA Loans
VA Refinance Mortgage with no appraisal, no credit, no income verification: IRRRL.
Other Traditional Chicago Home Loan With Bad Credit At Gustan Cho Associates
Types of Mortgage Loan Programs
Gustan Cho Associates has hundreds of mortgage loan programs available through its lending partnerships of over 160 wholesale mortgage lenders. Below are the available mortgage loan programs available for our clients:
- USDA Loans with no investor overlays
- FHA Streamline Refinance
- FHA 203k Loans
- All in One Mortgage
- Stated Income Mortgages
- No-Doc Mortgages
- Non-QM loans where there is no waiting period after bankruptcy or foreclosure
- Bank Statement Only mortgage programs
- Jumbo Mortgages with credit scores down to 600 FICO
- Condotel Financing and Non-Warrantable Condominium Loan Programs
- Commercial Mortgages
The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
This BLOG On Chicago Home Loan With Bad Credit Was UPDATED On February 27th, 2022