- The answer is NO
- All lenders need to meet the mandatory minimum agency guidelines of HUD, VA, USDA, Fannie Mae, and Freddie Mac
- For example, many borrowers think that all lenders have the same mortgage guidelines on FHA loans since they are government loans
- This is not the case
- For example, to qualify for a 3.5% percent down payment FHA loan, the borrower needs a minimum of a 580 credit score per HUD agency mortgage guidelines
- However, lenders can have higher lending requirements such as 620, 640, 660, or 680 credit score requirements
- The higher requirements by the individual lender are called lender overlays
In this article, we will discuss and cover Do All Lenders Have The Same Guidelines on government and conventional loans.
Agency Mortgage Guidelines Versus Lender Overlays
Do All Lenders Have The Same Guidelines On FHA Loans?
FHA loans are the most popular loan programs in the United States.
- HUD is the parent of FHA
- HUD is the federal agency that sets the minimum lending guidelines on FHA loans
- Many borrowers need to understand that not all lenders have the same lending requirements on FHA loans
- The issue many borrowers face is they may go to a lender a real estate agent refers to
- However, the loan officer may tell the homebuyer they do not qualify for an FHA loan
- The loan officer may disqualify the homebuyer due to the loan officer’s mortgage company lender overlays and NOT because the homebuyer does not meet the minimum HUD Agency Mortgage Guidelines
- For example, the homebuyer may have a 3.5% down payment and have the 580 credit score requirements mandated by HUD
- However, the loan officer’s mortgage company may require a 640 credit score as part of their lender overlays
- Unfortunately, many loan officers will not tell the loan applicant they meet all HUD Agency Mortgage Guidelines but do not qualify just with the individual lender
- Borrowers who get turned down often believe the loan officer who turned them down and is under the impression all lenders have the same lending guidelines on FHA loans
- This is not true
- Savvy borrowers do not take no for an answer and research the internet for solutions
- They often find us on the internet
- Over 75% of our borrowers are folks who got turned down for a mortgage by a different lender
Borrowers search us on the internet and find us due to not having any lender overlays not just on FHA loans but on all government and conventional loans.
Understanding Agency Lending Guidelines Versus Lender Overlays
Not all lenders are the same.
- Although all lenders need to meet the minimum agency mortgage guidelines, lenders are allowed to have higher lending standards that are above and beyond those of FHA, VA, USDA, Fannie Mae, Freddie Mac
- Before applying for a mortgage loan, all borrowers should evaluate their credit profiles
- Anyone with over 700 credit scores, great credit history, no collections, no late payments, and low debt to income ratios can qualify anywhere
- However, borrowers with lower credit scores, high debt to income ratios, outstanding collections, charged-off accounts, bankruptcies may need to find the right lender
- Just because you do not qualify with a particular lender does not mean you do not qualify with another lender
- Some lenders may not offer manual underwriting on FHA loans
- Some lenders may require a higher credit score requirements than the 580 FICO required by HUD
- Some lenders may not accept gift funds when HUD does allow for gift funds for the down payment and closing costs on a home purchase
- If you meet the minimum HUD Agency Guidelines, you will qualify for an FHA loan
Gustan Cho Associates Mortgage Group is one of the very few national lenders with no lender overlays on FHA loans.