FHA Loans Bad Credit Georgia With Credit Scores to 500 FICO

FHA loans bad credit Georgia mortgage requirements and guidelines make FHA home mortgages the most popular loan program for first-time homebuyers, borrowers with credit scores down to 500 FICO, and homebuyers with high-debt to income ratios. HUD, the parent of FHA, is the federal government agency in charge of the administration of FHA loans.

First-time homebuyers with little or no credit and buyers with bad credit and lower credit scores have a better chance of getting an approve/eligible per automated underwriting system on FHA loans than conventional loans. We will cover the details of the Georgia FHA loan requirements more in detail throughout this blog. Gustan Cho Associates has no lenders overlays on FHA Loans Bad Credit Georgia.

FHA Loans Bad Credit Georgia Loan Limits For 2022

The housing market in Georgia is strong. Georgia homebuyers have been facing fierce competition when shopping for homes. Bidding wars seem to be the new normal. Home prices have been increasing at an alarming rate. Despite home values being at historic highs, homes are still affordable.

HUD, the parent of FHA has been increasing the loan limits on FHA loans for the past six years due to increasing home prices. HUD announced the 2022 FHA loan limit at $420,680. It is almost a $100,000 increase from the 2021 FHA loan limit of $356,362. The 2022 FHA loan limit ceiling in high-cost areas is capped at $970,800. Homebuyers in high-cost counties throughout the United States in high-cost areas are eligible to qualify for a high-balance FHA loan up to a $970,800 loan limit.

FHA Loans Bad Credit Georgia Agency Guidelines For 2022

Georgia is a Southern State that is bordered by Florida and is one of the fastest-growing states in the country. The state is to the east of the Atlantic Ocean. It is East of South Carolina and West of the state of Alabama. Georgia borders the north by the state of Tennessee and the state of North Carolina.

Booming Housing Market With Strong Demand For Homes

It is one of the fastest-growing states when it comes to people migrating and homebuyers. Housing prices have been increasing throughout the whole state of Georgia with no signs of a correction. There is more demand for housing in the state of Georgia than there is inventory. Many Home Builders set up shops in Georgia and mortgage lenders with no overlays are in demand. Gustan Cho Associates is licensed in the State of Georgia and has no overlays on government and conventional loans in Georgia. In this article, we will cover and discuss qualifying for FHA loans in Georgia with prior bad credit.

How To Apply For An FHA Loan In Georgia?

We have written many blogs about getting a home loan with bad credit. FHA Loans is the most popular loan program in the nation. HUD, the parent of FHA, sets up agency mortgage guidelines for FHA loans. HUD is not a lender. HUD is a government agency that insures private lenders who originate and fund loans in the event their borrowers default on their FHA loans. Homebuyers can apply for an FHA loan with any HUD-approved lender. Banks, credit unions, and mortgage companies that are HUD-approved originate, process, underwriters, fund, and service FHA loans.

Do All Georgia FHA Lenders Have The Same FHA Loan Requirements?

Not all Georgia FHA lenders have the same FHA loan requirements. Lenders need to meet the minimum agency HUD mortgage guidelines. However, lenders can have higher FHA loan requirements that are higher than HUD agency guidelines which are called lender overlays. It is very important for borrowers to understand the basic HUD agency FHA loan requirements and guidelines in the event that they get denied an FHA loan by a lender with overlays. If a lender denies a borrower but the borrower meets the minimum agency HUD guidelines, the borrower can qualify at a different lender without lender overlays.

The Mission And Role Of HUD On FHA Loans In Georgia

HUD is a government agency that insures and guarantees FHA Loans that are originated and funded by banks and private mortgage companies. One of the most important guidelines that HUD has is the mandatory waiting period requirement after Chapter 7 Bankruptcy and Foreclosure. Georgia home prices have been appreciating over 10% every year for the past few years.

FHA Loans With Credit Scores Down To 500 FICO

FHA loans benefit first-time homebuyers, buyers with prior bad credit and lower credit scores, and those with bankruptcy and/or foreclosure.  Borrowers can qualify for an FHA loan with credit scores down to 500 FICO. You need a 580 credit score for you to be eligible for a 3.5% down payment FHA loan. Borrowers with under 580 FICO a 10% down payment. Historic record mortgage rates are one of the main reasons why the housing market is booming.

2022 Georgia FHA Loan Application Process For Homebuyers

Potential homebuyers need to get qualified and pre-approved prior to shopping for a home. Homebuyers need to consult with a licensed loan officer from a mortgage company licensed in Georgia. FHA loan applicants do not have to pay anything to get qualified and pre-approved.

The loan officer will go over your loan application and request certain documents including your income and employment information to process your FHA loan application. Once you are qualified, the loan officer will issue you a pre-approval letter. With a pre-approval letter, you can start shopping for a home and enter into a real estate purchase contract.

Best Bad Credit Mortgage Lenders For FHA Loans With Bad Credit

Not all Georgia FHA lenders have the same mortgage requirements. The best Georgia FHA lenders are mortgage companies with stellar reviews. Research the lender’s reputation online. Find out what type of lender overlays they have. If you have lower credit scores and prior bad credit but meet the minimum FHA loan requirements and guidelines, look at Georgia FHA lenders with no lender overlays.

Gustan Cho Associates is one of the few mortgage companies licensed in multiple states with no lender overlays on FHA loans. Over 75% of the borrowers at Gustan Cho Associates are folks who could not qualify at other mortgage companies due to their lender overlays. Interview a few loan officers and choose the mortgage professional you feel most comfortable with.

Can You Buy A House With FHA Loans With Low Credit Scores?

Homebuyers can buy a home with bad credit, lower credit scores, bankruptcy, foreclosure, and high debt-to-income issues. There are many different types of home mortgage loan programs.  Despite a recent uptick in rates, there does not seem to be any slowdown. HUD and the FHFA have increased FHA and Conforming loan limits for the past six years.

Georgia Loan Limits Increases Six Years in a Row Due To Surging Home Prices

HUD increased FHA loan limits for 2022 to $420,680 due to skyrocketing home prices. Borrowers can qualify for an FHA loan after bankruptcy, foreclosure, a deed in lieu of foreclosure, and a short sale. Government and conventional loans require mandatory waiting period requirements after bankruptcy and foreclosure.

Many people recover sooner than others after bankruptcy and/or foreclosure. Gustan Cho Associates has non-QM mortgage loan programs one day out of Chapter 7 Bankruptcy, Foreclosure, Deed In Lieu Of Foreclosure, Short Sale with no waiting period requirements. A 30% down payment is required.

FHA Loans After Bankruptcy in Georgia

Back in August 2013, HUD launched the FHA Back to Work Mortgage Program which did not last long.  The FHA Back To Work Mortgage Program turned out to be a disaster and did more damage than good. Countless home buyers who qualified literally went through Hell with the Back To Work Loan Program. Mortgage Companies were afraid to touch it. Many that did and issued loan commitments ended up retracting the loan approvals and not closing the loan.

The FHA Back To Work no longer exists but I would like to cover what the program entailed on this BLOG. There is a three-year waiting period after foreclosure, a deed in lieu of foreclosure, and a short sale to qualify for FHA Loans. The waiting period is two years after the Chapter 7 Bankruptcy discharge date. Homebuyers can qualify for an FHA loan during the Chapter 13 Bankruptcy repayment plan with trustee approval and with a manual underwrite.

The Now Extinct FHA Back To Work Mortgage Loan Program

Although the Back To Work Program no longer exists, we will cover briefly what the program entailed. There is an alternative to the Back To Work Mortgage that Gustan Cho Associates launched this year called Non-QM Loans. There is no waiting period after Foreclosure, Deed In Lieu Of Foreclosure, and Short Sale with NON-QM loans.

There is no waiting period after the Chapter 7 Bankruptcy discharge date with non-QM loans.  A 20% to 30% down payment is required depending on the borrower’s credit scores and how long the bankruptcy and/or foreclosure was. Mortgage Rates are higher than traditional FHA loans.

FHA Loans Bad Credit Georgia With The Extinct FHA Back to Work Guidelines

Here is how the FHA Back To Work Program worked. FHA Back to Work is no longer available but this section is for the archives:

• HUD’s FHA Back to Work mortgage program is a special program that enabled a borrower to get an FHA Loan after a Chapter 7 Bankruptcy and/or housing event
• FHA Back to Work mortgage loan program shortened the waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale to a one-year waiting period
• Traditional waiting periods are 2 years after a bankruptcy discharge, three years from the recorded date or sheriff’s sale date of foreclosure or deed in lieu of foreclosure
• Or three years after the date of the HUD’s settlement date of the short sale
• However, HUD’s FHA Back to Work Extenuating Circumstances due to an economic event has strict mortgage underwriting guidelines since it is a manual underwrite
• It is a great program for those who need a home loan with bad credit, especially first time home buyers
• First time home buyers who had a prior bankruptcy and have their credit re-established can get an opportunity to participate in HUD’s  FHA Back to Work mortgage program after one year of the discharge date of their bankruptcy

Unfortunately, this loan program turned out to be a major flop and has been discontinued.

Georgia FHA Loan Requirements in Georgia

Georgia home buyers seeking FHA loans with bad credit Georgia can now qualify with Gustan Cho Associates. Georgia first-time homebuyers or homeowners with prior bankruptcy can qualify for FHA loans bad credit Georgia. There are other loan programs other than the now-defunct Back to Work mortgage program Gustan Cho Associates has launched with no waiting period after bankruptcy and/or a housing event.

FHA Loans Bad Credit Georgia For Borrowers With 500 to 620 FICO Scores

We will briefly discuss how to qualify For FHA loans bad credit Georgia after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, and periods of bad credit. With the Back To Work Program, the borrower needs to have been unemployed or underemployed six months prior to filing bankruptcy, or the initiation of the foreclosure, deed in lieu of foreclosure, or short sale.

What Constitutes Extenuating Circumstances on FHA Loans

Households needed a 20% reduction in their household income. Proof needs to be provided via W-2s and tax returns. A Back to Work Mortgage loan applicant cannot have resigned or voluntarily quit their jobs. They need to have been terminated or laid off, or the business had to be gone out of business. A voluntary termination will automatically disqualify the mortgage loan applicant from qualifying for FHA Back to Work Extenuating Circumstances due to an economic event.

Quitting Job Does Not Constitute Extenuating Circumstances

For example, if an employee quit their job because a member of the family member was ill and you had a 20% reduction of their household income, this will not qualify home buyers for the Back to Work Extenuating Circumstances due to an economic event mortgage program. The reason being is that they voluntarily left their job.

Even though the reason they left their job was due to the medical illness of a family member. Reduction of income due to a divorce will also not be a qualifier for the Back to Work mortgage program even though half the income is reduced due to the other spouse leaving.

Best Mortgage Lenders For Borrowers With Bad Credit

Gustan Cho Associates is a national lender with no overlays on FHA loans. Here are the FHA Guidelines On Qualifying For a 3.5% down payment home purchase FHA Mortgage:

• 2 Year Waiting Period After Chapter 7 Bankruptcy
• Georgia Home Buyers can qualify for FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval
• There are no waiting period requirements after the Chapter 13 Bankruptcy discharged date
• Three-year waiting period after the recorded date of foreclosure or deed in lieu of foreclosure
• Three-year waiting period after a short sale date to qualify for FHA loans
• 580 minimum credit score to qualify for 3.5% down payment FHA loans
• Outstanding Collections And Charge Off Accounts do not have to be paid off
• The maximum Debt To Income Ratio To Qualify For FHA Loans is 46.9% front end

56.9% back end for approve/eligible per AUS Findings with 620 credit scores: 43% DTI with under 620 credit scores.

How Mortgage Underwriters Analyze Borrowers With Bad Credit

Georgia home buyers can qualify for FHA Loans Bad Credit Georgia without needing to pay off outstanding collections and charge off accounts. Just meeting the minimum credit score requirements and the income does not automatically qualify a person for an FHA loan. The overall borrower’s credit history will be reviewed, especially for borrowers with a Chapter 7 Bankruptcy and/or Housing Event. However, the mortgage loan borrower’s credit history will be scrutinized and analyzed. The credit history background check is one of the biggest reasons why mortgage loans get denials.

The Mortgage Underwriters Manually Underwrite FHA Loans

FHA and VA loans are the only two mortgage programs that allow manual underwriting. The main difference between the automated underwriting system approval and manual underwriting is lower debt to income ratio caps and a human underwriter scrutinizes the file with pins and needles. Even though mortgage borrowers meet all of FHA lending guidelines on manual underwriting, the credit history needs to be the following:

1. Credit payment history will be reviewed:
2. Borrowers must have had good credit and a timely payment history prior to the loss of employment or underemployment in cases of bad credit due to loss of job and/or business
3.  Credit will drop because of bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
4. Maybe credit scores will plummet 100 plus points
5. After bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale, borrowers cannot have any late payments and need re-established credit where the credit report will reflect an increase in credit scores
6. At Gustan Cho Associates we do 203k loans in the state of Georgia as well

Even if borrowers get no new credit or re-established credit, credit scores will increase as bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale, borrowers credit will slowly improve as it ages over time.

The Importance of Timely Payments In The Past 12 Months

Georgia Homebuyers who need to qualify for FHA Loans after bad credit with a national lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has a national reputation for not having any lender overlays on government and conventional loans.

We are mortgage brokers,  and correspondent lenders, and have the ability to broker non-QM and alternative financing loan programs. Over 75% of our borrowers are folks who could not qualify at other lenders or have gotten denied by another mortgage company. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Gustan Cho Associates is one of the fastest-growing national lenders with no overlays.

This article on FHA loans bad credit Georgia was updated and published on September 11th, 2022