FHA Loans Chicago With No Overlays

FHA Loans Chicago With No Overlays on Government Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

Qualifying For FHA Loans Chicago has its advantages due to the higher loan limits HUD Allows for the six counties surrounding the Chicagoland Area. Homes in Chicago and its collar counties are more expensive than in the rest of the state. Homebuyers can qualify for a one to four-unit FHA loan Chicago and surrounding counties with a 3.5% down payment.

However, the minimum credit score required for a 3.5% down payment FHA loan is 580 credit score. Homebuyers with under 580 credit scores and down to 500 FICO are eligible to qualify for FHA loans Chicago. Per HUD guidelines, borrowers with under 580 credit scores need a 10% down payment instead of a 3.5% down payment on a home purchase.

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Illinois FHA Credit Score Requirements

HUD, the parent of FHA, allows borrowers with under 580 credit scores and down to a 500 FICO to qualify for FHA loans. However, per HUD Agency Guidelines, any borrower with under 580 FICO requires a 10% versus a 3.5% down payment. For homebuyers who only can afford a 3.5% down payment with under 580 credit scores.

Rebuilding Credit To Qualify For FHA Loans Chicago

Gustan Cho Associates can help them boost their credit scores to over 580 with a few tricks of the trade. Homebuyers of two to four-unit multi-family homes have the same down payment requirements as buyers of single-family homes. If the borrower has at least a 580 credit score, they can purchase a two to four-unit multi-family home with a 3.5% down payment. Under 580 and down to 500 FICO credit scores requires a 10% down payment on two to four-unit properties in Chicago.

Please contact us at Gustan Cho Associates at 800-900-8569 or email us at gcho@gustancho.com. Text us for a faster response. The team at Gustan Cho Associates can help you rebuild and reestablish your credit so you can qualify for an FHA loan at the lowest possible mortgage rates.

High-Cost Counties In Chicago And Collar Counties

Chicago is surrounded by six counties. FHA Loan Limits are substantially in the Chicago Metropolitan Area and surrounding counties than in the rest of Illinois. The following six Chicago, Illinois counties are considered high-cost areas. 2022 FHA loan limits for areas with national median home prices are $422,680.

The 2022 FHA loan limit was almost a $100,000 increase from the 2021 $356,362 FHA loan limit. The Federal Housing Finance Agency increased 2022 conforming loan limits to $647,200 on single-family homes in counties with national median home prices. The ceiling in high-cost counties on both conforming and FHA loans is capped at $970,800.

Six High-Cost Collar Counties Surrounding Chicago With High-Balance FHA Loan Limits

The six-collar counties surrounding Chicago are called the suburbs of Chicago. The six-collar counties have higher loan limits than the rest of Illinois. Here are the six high-cost counties with higher limits on FHA Loans Chicago:

  • Cook County
  • Lake County
  • Will County
  • McHenry County
  • DuPage County
  • Kane County

FHA Loan Requirements In Chicago And Surrounding Suburbs

Chicago and its surrounding suburbs have higher home prices than the rest of the state. This is due to higher home values. HUD set higher FHA Loan Limits for Chicago and its six surrounding counties for owner-occupant one to four-unit homes. Needs to be owner-occupant primary homes.

What Type of Properties Can I Buy With FHA Loans Chicago

HUD, the parent of FHA, allows one to four-unit residential properties. It can be condominiums, however, the condo complex needs to be FHA Approved. The minimum credit score required to qualify for a 3.5% down payment FHA Loan Chicago is 580. Borrowers under 580 can qualify for FHA Loans.

FHA Loans Chicago With 500 Credit Scores

For anyone with credit scores between 500 to 579, a 10% down payment is required versus 3.5%. The debt-to-income ratio on FHA Loans Chicago depends on the borrower’s credit scores. FHA allows 46.9% front-end DTI and 56.9% DTI for borrowers who have at least 620 credit scores. Borrowers with under 620 FICO credit scores have caps on DTI. The maximum debt to income ratio is 43% DTI to get an approve/eligible per Automated Underwriting System.

Role Of The U.S. Department Of Housing And Urban Development 

The United States Department of Housing and Urban Development (HUD) is the parent of the Federal Housing Administration (FHA). FHA is not a mortgage lender. FHA is a government agency under HUD. The role and mission of FHA are to promote homeownership to hard-working Americans by insuring FHA Loans are originated and funded by private lenders.

How Does The FHA Mortgage Process Work?

Lenders need to follow HUD Guidelines in order for FHA to insure FHA loans. FHA loan lenders originated and funded that go into default and foreclosure, HUD insures lenders. Lenders are eager and willing to lend FHA-insured loans with low-interest rates and low down payments due to the low risk of having HUD insure the loans they originate.

FHA Loans For Bad Credit Borrowers With Low Credit Scores In Chicago

FHA has one of the most lenient credit and income guidelines out of any other loan program in the U.S. Borrowers with prior credit issues and higher debt-to-income ratios can now qualify for FHA loans Chicago. The great benefit of FHA Loans is borrowers do not have to meet the standard mortgage requirements such as having a 20% down payment and great credit scores.

Comparison Of FHA Loans Conventional Loans

The two most popular programs in Chicago are FHA loans and conventional loans. VA loans are probably the best home loan program but they are limited to eligible active duty and/or retired veterans with a VA certificate of eligibility (COE). Conventional loans have higher lending requirements than FHA loans. Both conventional and FHA loans benefit borrowers with good credit. However, FHA loans do have much lenient agency mortgage guidelines.

Are FHA Loans Chicago For Bad Credit Only?

Most homebuyers think that FHA Loans are for folks with bad credit, low income, and low credit scores. This is not the case. FHA is a great loan program for homebuyers who have little money for their down payment and do not have a strong credit profile. After the 2008 Mortgage and Real Estate Meltdown in Chicago and the rest of the United States, FHA Loan Programs have become more popular than ever before in history. This is because most lenders have set higher lending standards like larger down payment requirements and higher credit requirements.

FHA Loans Chicago For Low Credit Scores

First Time Home Buyers with little to no credit tradelines, low credit scores, bad credit, and high debt-to-income ratio will have more benefits with FHA loans than any other mortgage loan program. Borrowers with the following factors will find FHA loans the best loan program for a home purchase:

  • Buyers who need to purchase a home with a low down payment
  • FHA requires a 3.5% down payment on a home purchase with only 580 Credit Scores
  • Borrowers with low credit scores
  • The minimum credit score on FHA loans is 500 FICO

Automated Underwriting System Findings on FHA Loans

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Need an approve/eligible per automated underwriting system (AUS) or eligible for FHA manual underwriting. To get an AUS approval, borrowers need timely payments in the past 12 months. Borrowers with lower income are eligible for FHA loans with non-occupant borrowers. HUD allows up to 46.9% DTI front end DTI and 56.9% DTI to get an approve/eligible for Automated Underwriting System approval.

Can I Get FHA Loans Chicago With Unpaid Collections?

Outstanding collections and charge-off accounts do not have to be paid off to qualify for FHA Loans Chicago. HUD permits non-occupant co-borrowers who are related to the main borrower by blood, marriage, or law to be added on for borrowers who do not meet the income requirements and/or do not have documented income on the main borrower’s 3.5% down payment home purchase.

Borrowers who are not related to the main borrower can be non-occupant co-borrowers but need to put a 25% down payment versus a 3.5% down payment. Gift funds are allowed for the down payment and closing costs. HUD allows seller contribution of up to 6% for the homebuyer’s closing costs.

HUD Guidelines on Gaps in Employment on FHA Loans

Qualifying for FHA with gaps of employment in the past two years is allowed: Borrowers who have been unemployed for six months or less, just need to be employed for 30 days at their new full-time jobs to close on their FHA Loans. Borrowers who have been unemployed for six or more months need to be in their new jobs for six months to qualify for FHA Loans. FHA has W-2 income-only mortgages for borrowers who have substantial unreimbursed expenses.

FHA Lenders In Chicago And Suburbs

Not all Illinois FHA lenders have the same mortgage requirements on FHA loans in Chicago. Many Illinois FHA lenders have lender overlays which are higher requirements than the minimum agency HUD guidelines. This is why it is very important to understand the minimum HUD 4000.1 FHA Handbook on FHA loans. This way, if one lender says you do not qualify but meet HUD guidelines, you can get an FHA loan approval in Chicago from a different lender with no lender overlays on FHA loans. Gustan Cho Associates has no lender overlays on FHA loans in Illinois.

Why Do People Get FHA Loans Chicago?

FHA Loans are extremely popular in the Chicagoland Area and its six surrounding counties. Over 35% of all loans in Chicago and its surrounding suburbs are FHA Loans. FHA Loans Chicago is different than other areas. This is because Chicago FHA Loan Limits are substantially higher than the rest of the state of Illinois as well as the nation. There are many different types of loan programs. FHA Loans are by far more popular than any other loan program.

FHA Loans Chicago With Low Down Payment and Low Rates

As mentioned earlier, HUD is the parent of FHA and it is not the function of FHA to lend money. This federal agency’s role and function is to guarantee home loans that meet FHA Guidelines. FHA’s role is to insure loans that have been approved, originated, and funded by private lenders, banks, and financial institutions that are HUD Approved Lenders.

The guarantee that FHA offers is in the event that the FHA Loan that was funded ever goes into default and foreclosure, FHA then will guarantee the lender against the loss. In order for FHA to guarantee the loan, all aspects of the loan need to meet FHA Lending Requirements.

Low Risk To Lenders Due To Government Guarantee

Due to the backing of the credit and faith of the federal government standing by FHA loans, financial institutions have little risk when originating and funding FHA Loans. Lenders can offer the following benefits for Chicago FHA Borrowers as well as other borrowers throughout the country:

  • Competitive low mortgage interest rates
  • 3.5% down payment
  • Lenient credit requirements
  • 580 minimum credit scores

Can I Get FHA Loans Chicago With Bad Credit?

Outstanding collections and charge-offs do not have to be paid to qualify for FHA Loans. Maximum debt to income ratio caps are at 46.9% front end and 56.9% back end DTI for borrowers who have at least a 620 Credit Score to get AUS Approval. HUD guidelines on FHA loans allow 100% of the down payment to be gifted. Allows for non-occupant co-borrowers

Illinois FHA Loan Requirements

HUD, the parent of FHA sets the minimum FHA loan requirements for Illinois. Here are the following minimum FHA loan requirements in Chicago and the state of Illinois. A legal lawful resident of the United States. Borrowers do not have to be United States citizens. However, they do need to be in this country legally. Borrowers need to have a valid social security number and card and meet the legal age in the state of Illinois to sign real estate and mortgage documents.

Who Can Qualify For FHA Loans Chicago?

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Have two-year employment history, not necessarily continuous. Borrowers need to have two years of residential history in the United States. Only owner-occupants of one to four-unit primary residential properties are eligible for FHA loans. HUD does not insure second homes and investment properties. Condominiums are allowed but the Condominium Complex generally needs to be HUD Approved. Condos that are not HUD Approved may be eligible to purchase a condo in a non-HUD-Approved condo complex if they can get an FHA Spot Loan approval. 

FHA Credit Score And Down Payment Requirements

FHA Loans Chicago With No Overlays on Government Loans

FHA loans are very popular among first-time homebuyers due to the low down payment requirements and lenient credit guidelines. Below are the bullet points on the minimum HUD guidelines on FHA loans:

  • 3.5% down payment for borrowers with at least 580 credit scores
  • Borrowers under 580 can qualify for FHA Loans Chicago with a 10% down payment
  • The minimum credit score required to qualify for FHA Loans is 500
  • Debt to Income Ratio caps at 56.9% back end and 46.9% front end to get approve/eligible for Automated Underwriting System if credit scores are 620 minimum
  • Under 620 max DTI cap is 43% DTI.
  • Borrowers can qualify after foreclosure and bankruptcy: 2-year waiting period after Chapter 7 Bankruptcy discharged date
  • Borrowers can qualify for an FHA mortgage one year into a Chapter 13 Bankruptcy repayment plan with the approval of their Chapter 13 Trustee
  • Chapter 13 Bankruptcy does not need to be discharged
  • No late payments during Chapter 13 Bankruptcy repayment plan
  • Needs to be manually underwritten
  • There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify

Any Chapter 13 Bankruptcy discharge date that has not been discharged for at least two years needs to be a manual underwrite. Manual underwriting guidelines apply.

FHA Loan Limits Chicago

There are Loan Limit Restrictions on FHA Loans in Chicago. The maximum FHA Loans Chicago Limits depends on the county the property is located within the state of Illinois. The loan limits for the six counties surrounding Chicago have the same uniform FHA Loan Limits. Here are the six counties of Illinois that have higher FHA Loan Limits:

  • Cook
  • Lake
  • Will
  • DuPage
  • McHenry
  • Kane

2022 FHA Loan Limits For Chicago and Suburbs

HUD and the Federal Housing Finance Agency (FHFA) have increased FHA and conforming loan limits for the past six years due to skyrocketing home prices. Below are the 2022 FHA and Conforming loan limits on FHA and Conventional loans.

  • Single Family Unit    $422,680
  • Two Family Unit        $$538,650
  • Three Family Unit    $651,050
  • Four Family Unit       $$809,150

2022 FHA Loan Limits For The Rest Of Illinois

The following are the 2022 FHA loan limits for the rest of Illinois counties outside the Chicago Metropolitan area and surrounding collar counties:

  • One-unit: $420,680
  • Two-unit: $538,650 
  • Three-unit: $651,050
  • Four-unit: $809,150

The above FHA Loan Limits will be for most areas in the state of Illinois. The reason for the drastic reduction of FHA Loan Limits outside the six counties surrounding. Chicago is due to the fact that housing values outside the six counties surrounding Chicago is substantially much less and FHA loan limits are based on the median cost of home prices.  A $368,00 home in downstate Illinois will go much further than a Chicago waterfront condominium.

Two To Four-Family Units FHA Loans Chicago

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Those who are familiar with Chicago properties know that many properties in Chicago and its surrounding suburbs are two to four-unit multi-family units. Many neighborhoods of Chicago are listed below:

  • Albany Park
  • Old Irving
  • Bucktown
  • Lakeview
  • Humbolt Park
  • Austin
  • Wicker Park
  • Lakeview
  • DePaul
  • Ukrainian Village
  • West Town
  • Jefferson Park
  • Logan Square
  • West Bucktown
  • Little Italy
  • Greektown
  • Rogers Park
  • Lincoln Square
  • Mount Greenwood
  • Beverly
  • Morgan Park

West Humbolt Park and surrounding suburbs are lined up with two flats, duplexes, three units, and four-unit multi-family dwellings.

Purchasing 2 To 4 Units With FHA Loans Chicago

Home Buyers who are interested in purchasing a 2 to 4-unit multi-unit property can buy it with an FHA loan. Only a 3.5% down payment is required. The great news is that homebuyers of two to four-unit properties can purchase multi-unit properties with the following:

  • 3.5% down payment and 580 credit scores
  • Less than perfect credit
  • Borrowers can also use potential rental income of 85% of potential market rents on their rental units as qualified income

First-time homebuyers who are planning on becoming real estate investors can purchase their first home with a multi-family residential property using an FHA Loan.

FHA Loans Chicago With No Overlays

FHA Loans is hands down the best mortgage loan program not just for Chicago home purchases but anywhere in the country. An FHA Loan is affordable and most anyone with a full-time job and steady income will be able to qualify for FHA Loans Chicago with Gustan Cho Associates. Gustan Cho Associates is a national mortgage company licensed in multiple states with no lender overlays on government and conventional loans.

Getting Qualified And Pre-Approved For FHA Loans Chicago

Let the FHA mortgage specialists at Gustan Cho Associates help borrowers navigate through the mortgage loan application process to insure that borrowers get the right home loan at the right price. Contact us at Gustan Cho Associates at 800-900-8569 or text for a faster response today! Or email us at alex@gustancho.com. Gustan Cho Associates has a five-star national reputation for not having any lender overlays on government and conventional loans. We are also experts in non-QM loans.

  • FHA Loans with minimum credit scores of 580
  • 3.5% down payment
  • VA Loans with no minimum credit score requirements
  • No debt to income ratio requirements on VA Loans with approve/eligible per AUS
  • USDA Loans
  • Conventional loans with no lender overlays
  • FHA 203k Loans
  • First-time home buyers programs on states Gustan Cho Associates licensed in
  • New construction loans
  • 90-day Bridge Loans for exiting properties with equity 
  • One day out of bankruptcy and foreclosure with our NON-QM Loans
  • No Tax Returns with our Bank Statement Mortgage Loans For Self-Employed Borrowers
  • Condotel and Non-Warrantable Condo Financing
  • Licensed in multiple states

The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. We have a national reputation for being able to do loans other lenders cannot do. Gustan Cho Associates is a lender with no lender overlays on government and conventional loans. We also have the ability to broker non-QM and specialty mortgage loan programs. 

 

FHA Lenders In Chicago Illinois With No Overlays Business Model

Most Lenders have one or another form of Lender Overlays. However, Gustan Cho Associates has a no overlay model. Here is our mortgage lending model:

  • Why have overlays when borrowers can meet the minimum guidelines set forth by HUD?
  • No Overlays on credit scores on government and conventional loans
  • No Overlays on debt to income ratios on government and conforming loans
  • No Overlays on collection and charge off accounts no matter how much the outstanding balance
  • Help Scenario Desk So If A Borrower has questionable credit, it gets clarified before pre-approval
  • No Overlays on VA Loans
  • VA does not have a minimum credit score requirement
  • No Overlays on FHA Loans
  • Only requirements are 580 for 3.5% down payment FHA Home Purchase Loan
  • Borrowers under 580 credit scores, 10% down payment is required
  • No Overlays on USDA LOANS
  • Only requirements are 580 Credit Scores
  •  All manual underwrites requireverification of rent 
  • No credit tradelines are required unless conditioned on automated underwriting system
  • We go off automated finding on all government loan programs
  • There no lender overlays on VA Loans
  • No overlays on VOR
  • As long with 620 Credit Scores
  • Debt to income ratios can go up as high as 56.9% DTI on the back end and 46.9% front end to get an approve/eligible per AUS Findings
  • NON-QM Loan Programswhere there is no waiting period after bankruptcy or foreclosure
  • Bank Statement loan programs for self-employed borrowers
  • Ability to broker deals and correspondent relationships with wholesale lenders
  • 21-day loan closings.
  • One-Stop-Shop

Borrowers seeking FHA Lenders In Chicago Illinois with zero lender overlays, contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.


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