In this blog, we will discuss and cover qualifying and getting approved on FHA loans with not paying off collections and charged-off accounts. I met Gustan Cho when I was working with another lender as a licensed mortgage loan originator. I was seeking out some information concerning a loan that I was working on at my mortgage company. I needed a second opinion in qualifying for FHA Loans With Not Paying Off Collection Accounts.  While researching about the 5% rule for outstanding unpaid non-medical collections, it led me to his great website, Gustan Cho Associates Mortgage Resource Center.

How Do Lenders Process and Underwrite FHA Loans With Outstanding Collection Accounts

Here is the rule in qualifying for FHA loans with outstanding collection accounts. If you have a total aggregate balance of unpaid non-medical collections that is greater than $2,000, then 5% of the unpaid outstanding collection account balance will be taken into calculating your debt to income ratios. Those collections will not have to be paid off and you do not have to make any payments but the 5% rule only applies just in calculating debt to income ratios. In this article, we will discuss and cover FHA Loans With Not Paying Off Collections And Charge Off Accounts.

Meeting Gustan Cho For The Very First Time To Find About More About FHA Loans With Not Paying Off Collections

After further reading some of the requirements for his company, it wowed me to call him to find more about FHA loans With Not Paying Off Collections. Gus answered the telephone with such excitement in his voice, it literally gave me energy. As he and I chalked it up about the company that I was working for, something dawned on us. The lender I was working with has stricter overlays than Gus’s company and FHA Loans With Not Paying Off Collections was a part of their overlays. FNMA, Freddie Mac, FHA, and VA have basic guidelines that lenders adhere to. Lenders, in turn, can add extra requirements on top of those guidelines which are called mortgage lender overlay. I did know that most mortgage companies did have many lender overlays. I was excited to find a company such as Gustan Cho Associates where there are no lender overlays on all of their government and conforming mortgage products.

How I Met Gustan Cho and The Team at Gustan Cho Associates

After our conversation, Gus realized how talented I was and the years of experience I had in the mortgage industry as a licensed mortgage loan originator so he offered me a position to open a branch in N.C. How does all of this affect borrowers in Illinois?  This means more people will be able to get loans. Gustan Cho is the leader of Gustan Cho Associates and is in charge of expanding his team nationwide.

Not All Lenders Have The Same Mortgage Guidelines on Government and Conventional Loans

Most licensed mortgage loan officers do not realize lenders like Gustan Cho Associates Mortgage Group exists. Gustan Cho Associates Mortgage Group has no overlays on FHA, VA, USDA, and Conventional Loans. I did not realize that over 75% of the borrowers of Gustan Cho Associates are borrowers who were either denied or could not qualify at another lender. Most of our borrowers were out of options that they gave a final chance in by searching the internet and finding Gustan Cho Associates and contacting us.

Gustan Cho Associates Help Borrowers Qualify For FHA Loans With Not Paying Off Collectionshttp

First, our credit scores start at 580 FICO to qualify for a 3.5% down payment FHA home purchase mortgage loan. Most banks, mortgage brokers, or lenders require a minimum credit score of 620 and 640. Even though it is not a HUD requirement and agency guidelines only require a 580 FICO credit score, banks and most other lenders will require a higher credit score than the 580 credit score. Second, our debt to ratios can also go higher-up to 56.9% DTI depending on credit score. HUD allows the front-end debt to income ratios to be as high as 46.9% DTI and the back-end DTI to be as high as 56.9% DTI with a 620 FICO credit score. If the credit score is lower than 620 FICO, the debt to income is capped at 43 percent DTI. Also, may not need verification of rent depending on credit score.

How To Provide Verification Of Rent If Lenders Require It

Borrowers can rest assured if credit scores are higher than 620 FICO, the Automated Underwriting System will not ask for rental verification. This helps those who pay to private landlords, not a management company, and cannot prove it by providing 12 months of canceled checks or copies of money orders. If credit scores are below 580 FICO, the Automated Underwriting System, or AUS, may get you an approve/eligible per DU FINDINGS but may require verification of rent. If you cannot provide a VOR, then your loan officer can help you get your credit scores to at least 620 FICO by using some simple tricks of the trade. When it comes to judgments and tax liens, borrowers think they cannot qualify for a loan. We still may be able to approve your loan if you have a payment plan set up and are making payments on time for at least three months. A written payment agreement is required and at least three months’ worth of canceled checks will be required. This will be added to your debt ratio, of course. A lot of borrowers don’t think they qualify for many reasons.

The Team at Gustan Cho Associates

The team at Gustan Cho Associates consists of support and licensed personnel. We are a close-knit family. Some staff work in our regional Oakbrook Terrace, Illinois branch office (NMLS 2315275) while others work remotely throughout the country. Our senior loan officers have anywhere between 10 to 30 years of experience originating loans. Over 75% of our borrowers are folks who could not qualify at other lenders and/or got a last-minute loan denial.  All of our contributing associate editors and writers for Gustan Cho Associates are practicing full-time experienced licensed loan officers.

The Mission of Gustan Cho Associates

All of us at Gustan Cho Associates share the same passion to make the dream of homeownership a reality for renters, first-time homebuyers, and seasoned homebuyers. Our expertise at Gustan Cho Associates is to help those who have had trouble qualifying for home loans due to prior bad credit or due to extenuating circumstances that they had at one time in their lives. As long as folks have recovered and cannot qualify at their local banks or at mortgage companies due to their lender overlays, we can help them at Gustan Cho Associates. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.