Qualifying For FHA Loan With Under 600 Credit Score In Florida

This BLOG On Qualifying For FHA Loan With Under 600 Credit Score In Florida Was Updated On May 26, 2017

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Team are experts in originating and closing FHA Loan With Under 600 Credit Score In Florida. Most mortgage lenders have higher credit score requirements due to lender overlays. There are two types of guidelines when it comes to FHA Loans:

A credit score of 600 or under is considered to be a bad credit score by not just mortgage companies but also by most creditors.  The United States Department of Housing and Urban Development (HUD) , the parent of the Federal Housing Administration (FHA) , promotes home ownership and creates minimal FHA Mortgage Requirements where most hard working Americans can qualify for home loans. FHA is not a lender. FHA insures home loans that meet FHA Guidelines to banks and mortgage companies who are HUD Approved Lenders and these lenders follow all aspects of FHA Underwriting Guidelines. However, most lenders will have lender overlays on FHA Loans.

What Are FHA Lender Overlays?

FHA Lender Overlays are additional mortgage requirements that a particular lenders places that is on top the minimum required by HUD Guidelines.

Here are basic FHA Guidelines Versus Lender Overlays:

  • Minimum credit scores to qualify for a 3.5% down payment FHA insured mortgage loan is 580 FICO.
  • Lenders can have overlays on credit scores where they can require 620 to 640 FICO credit scores even though FHA only requires 580 FICO.
  • The higher credit score requirement by the lender is called FHA Lender Overlay On Credit Scores.
  • Most Lenders do not want borrowers with lower credit scores even though they may qualify under HUD Guidelines.
  • The Gustan Cho Team has no overlays on credit scores or any other FHA Guidelines and just goes off the HUD Guidelines.

Most mortgage lenders have a minimum credit score requirement as part of their lender overlays

  • Most lenders will have lender overlays.
  • Most lenders have a minimum credit score requirement of 640 FICO .
  • Reasons why lenders have overlays is because they believe that borrowers with lower credit scores have higher probability to default of their home loans.

Where Can I Qualify FHA Loan With Under 600 Credit Score?

A large percentage of our borrowers at The Gustan Cho Team have credit scores under 600 FICO.

  • Over 75% of our borrowers are home buyers who were either denied for a FHA Loan at the last minute or are going through major stress during mortgage process because they were not properly qualified by their loan officers.
  • Home buyers who need to qualify for FHA Loan with under 600 credit score needs to consult with mortgage lenders with no overlays on FHA Loans.
  • The Gustan Cho Team has no overlays on government and conventional loans.
  • There is no reason why borrowers who have a solid pre-approval for not close on their home loans on time.
  • There is no reason why anyone should stress during mortgage process.
  • Most of our borrowers close on their home loans in 30 days or less.

Reasons For Low Credit Scores

There are many reasons why consumers have lower credit scores than others.

  • If someone loses their job due to getting laid off or getting injured on the job even for a few months and they get behind in paying their monthly bills, their credit scores can easily drop more than 100 points. 
  • Unfortunately, it will take much longer than several weeks to get their credit scores back up to where they were even when they start making their monthly debt payments on time.

Here are some reasons why credit scores drop:

  • Recent late payments on installment and/or revolving credit account
  • Recent bankruptcy and/or foreclosure
  • Maxed out credit cards
  • Multiple hard credit inquiries
  • Collections and/or charge off accounts posting on credit report

Underwriting FHA Loan With Under 600 Credit Score Borrowers

There Gustan Cho Team are specialists in qualifying, processing, underwriting, approving, and closing FHA Loan With Under 600 Credit Score borrowers.

  • We will not be approving and funding FHA Loan With Under 600 Credit Score borrowers if we did not believe that our borrowers were not credit worthy and would not be making their mortgage payments timely.
  • We approve and fund FHA Loan With Under 600 Credit Score borrowers because we understand the overall credit profile of the mortgage loan borrower and believe that they fully qualify and has the ability to repay their FHA Loans.
  • Lenders understand that borrowers do go through hard times and most people can rebuild and re-establish their credit and income.
  • Lenders will not approve and fund a home loan if they were not 100% confident that borrowers can pay their mortgage payments on time and not default on their home loan.
  • The mortgage lender takes into account the reason why borrower’s credit scores are low and will look at other factors of the borrower such as the following:
  • Employment history
  • Overall credit history
  • Reserves
  • Compensating Factors

Lenders will take into account not just the recent credit payment history but the overall credit profile of the borrower. Borrowers needing to qualify for FHA Loan With Under 600 Credit Score in Florida, please contact Gustan Cho at 800-900-8569 or text Gustan on his cell at 262-716-8151 for faster response. The Gustan Cho Team is available 7 days a week, evenings, weekends, and holidays by phone or emailing us at gcho@gustancho.com.

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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