In this blog, we will discuss and cover qualifying for conventional loans with no lender overlays in Illinois. Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans. All of our government and conventional loan programs have no mortgage lender overlays. As long as mortgage borrowers get an approve/eligible per DU Findings from Fannie Mae’s Automated Underwriting System that is all we go by. The mortgage loan will get approved as long as the following meets Fannie Mae and/or Freddie Mac Mortgage Guidelines:
- Income
- Asset
- Debt
- Liabilities
- Credit Scores
- Payment History
- Waiting Period After Bankruptcy
- Waiting Period After Short Sale And/Or Foreclosure
- Waiting Period After Foreclosure
Unlike other mortgage companies and banks, Gustan Cho Associates has no overlays on government and conventional loans.
No Overlays On Conventional Loans
Now, we offer conventional loans with no lender overlays in Illinois and 21 other states. Conventional loan homebuyers require down payment of 5%. Borrowers need an approve/eligible per DU Findings from Fannie Mae’s and/or Freddie Mac’s Automated Underwriting System
Mortgage Lender With No Lender Overlays
Most Conventional lenders and banks have lender overlays. What are lender overlays? Overlays are additional mortgage lending requirements that are above and beyond those of Fannie Mae and/or Freddie Mac. Fannie Mae and Freddie Mac set the mortgage guidelines for Conventional loans. Conventional lenders do have to meet the minimum mortgage lending requirements from the Automated Underwriting System but are allowed to set higher standards. Gustan Cho Associates has no overlays on Conventional loans as well as government loans.
Government Loan Programs
Here are the three government loan programs:
- FHA loans
- VA loans
- USDA loans
Getting Approve/Eligible Per AUS FINDINGS
Fannie Mae and/or Freddie Mac has higher lending requirements than FHA, VA, USDA loans insured mortgage loans. Waiting periods after a bankruptcy and foreclosure are as follows:
- 4 year waiting period after the recorded date of deed in lieu of foreclosure and/or short sale
- 4 year waiting period after Chapter 7 Bankruptcy discharged date
- 2-year waiting period after Chapter 13 Bankruptcy discharged date
- 4 year waiting period after Chapter 13 dismissal date
- 7 year waiting period after the recorded date of the foreclosure
Basic Conventional Loan Guidelines
Minimum credit scores for conventional mortgage loan programs is 620. Debt to income ratio requirements for conventional loan programs is normally capped at 50% to get an approve/eligible per automated findings. The cap on FHA-insured mortgage loan programs can be as high as 56.9%. All of these lending criteria will be picked up by Fannie Mae’s Automated Underwriting System and the results will be given per DU Findings
Mortgage Rates On Conventional Loans
Conventional loan mortgage rates are normally 0.50% higher than FHA insured mortgage loan mortgage rates. The biggest advantage with conventional loans is that mortgage insurance is not required if you as a borrower can put in a 20% down payment. For homebuyers who put less than 20% down payment, private mortgage insurance will be required on Conventional loans. Private Mortgage Insurance (PMI) rates vary depending on borrowers’ credit scores. FHA MIP is flat at 0.85% of the FHA Loan Balance Amount.
Cases Where Home Buyers Qualify For Conventional Loans With No Lenders Overlays But Not FHA Loans
There are cases where home buyers will qualify for Conventional loans BUT NOT FHA loans. If a home buyer had a mortgage as part of Chapter 7 Bankruptcy, the waiting period on Conventional versus FHA loans is different.
Here is how it works:
- There is a four year waiting period after Chapter 7 Bankruptcy to qualify for Conventional loans
- If a borrower had a mortgage or multiple mortgages as part of Chapter 7 Bankruptcy and those mortgages were not reaffirmed, they can qualify for a Conventional mortgage four years from the discharged date of the Chapter 7
However, the housing event needs to be finalized via:
- Foreclosure
- Deed In Lieu Of Foreclosure
- Short Sale
HUD Guidelines On Mortgage Included In Bankruptcy
With FHA loans, homebuyers can qualify for FHA loans if they had mortgage part of Chapter 7 Bankruptcy under the following circumstances:
- Three year waiting period after recorded date of foreclosure and/or deed in foreclosure after the discharged date of the Chapter 7
- Three year waiting period after the short sale date after the Chapter 7 Bankruptcy discharged date
There are many instances where home buyers qualify for Conventional loans BUT NOT FHA loans due to the above guidelines.
Conventional Loans With No Lender Overlays Specific Products
Self Employed Borrower(s) with ONLY 1 Year Tax Returns are now eligible as long as we get approval per DU Findings. (1099 and Schedule C borrowers included where LP indicates only 1 Year Tax Returns Required). Use Retirement Assets to Qualify as Income. Non-Qualifying Co-Borrower(s) Conventional and FHA to Qualify. Up to 10 Financed Properties. The lender paid MI to 95% LTV with 620 FICO Scores. Unlimited HARP 2.0 with Freddie & Fannie, including N/O/O and Condos. Cash Out with Properties Currently Listed on MLS.
Conventional Loans With No Lender Overlays On Appraisals
We accept Appraisal Transfer from all Appraisal Management Companies. No landlord History is needed to Qualify with Rental Income. Condo Spot Approvals. Professional College Graduate Home Program (1 Paystub). No Conventional Overlay Matrices to Decipher, Your AUS Approvals are Your Guidelines.
Refinancing FHA To Conventional To Avoid FHA MIP
There are many homeowners who purchased their home several years ago with FHA loans. Many homeowners in Illinois, California, California, Ohio, Kansas, Alabama, Georgia, Texas, New Mexico, Arizona, Arkansas, Minnesota, Wisconsin, Michigan, Iowa, Colorado, and other parts of the country has seen their home values increase year after year. Many homeowners have seen their property values increase where they have over 20% plus in home equity where they can refinance their current FHA Loans to a Conventional Mortgage. By doing so, they can eliminate the hefty FHA Mortgage Insurance Premium. Gustan Cho Associates has no lender overlays on government and conventional loans. Home Buyers needing to qualify for home loans with a lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.
