This BLOG On FHA Loans With Recent Late Payments Mortgage Guidelines Was PUBLISHED On May 21st, 2020
FHA Loans With Recent Late Payments? Can I qualify for FHA Loan With Bad Credit? Can I qualify for FHA Loan with outstanding collections and charge off accounts without having to pay them? The answer to this question is yes to qualifying for FHA Loan with bad credit.
- It is possible to get a home loan with bad credit in most circumstances
- But there are situations where not everyone is able to qualify for a home loan with bad credit
- For example, borrowers can have good credit scores but with recent late payments on credit report, then that may pose a problem.
- Borrowers can still qualify for a home loan with bad credit and recent late payments
In this article, we will discuss and cover FHA Loans With Recent Late Payments Mortgage Guidelines.
Recent Late Payments On Credit Report
Lenders view recent late payments as any payments that has been paid 30 days late in the past 12 months:
- All lenders really frown on borrowers who had recent late payments in past 12 months
- One or two recent late payments with a strong letter of explanation is not a problem
- But borrowers with multiple late payments in the past 12 months, then it can pose a problem in qualifying for mortgage
- Just qualifying with the minimum credit score is not everything in getting a mortgage approval
- For example, to qualify for a 3.5% down payment purchase FHA loan, the minimum credit score required is 580
People can have a 580 score but if they had 3 late payments in the past three months without any valid reason, chances are they may not qualify.
What Happens If I Got Multiple Recent Late Payments?
Borrowers with bunch of recent late payments, there are potential solutions. FHA is very lenient in setting up FHA Guidelines with bad credit. But does not want to see borrowers who have a habit of not paying their bills timely. Borrowers can qualify for FHA Loans With Recent Late Payments. But lenders want to know the reason why they were late.
- Consumers who have been always timely with creditor and it was a one time late payment, then they may try contacting the creditor and beg them for mercy to get a one time deletion off.
- Many times creditors will do this as a one time favor for their clients
- However, if consumers who is a habitual late payer, then the chances will be zero to none to get the late payment record deleted off credit report
- In the event if the customer service rep denies deletion request, ask to speak with a supervisor.
In the event creditor does not remove the recent late payments off credit report, then borrower may have to wait at least six months of timely credit payment history.
One Late Payment In Past 12 Months
Mortgage lenders will most likely allow one or two late payments in the past 12 months.
- Most of them will allow one late payment in the past 6 months only with a solid letter of explanation
- A good excuse would be that you forgot to pay the annual membership fee of credit card and credit balance was zero
- But due to them charging the annual $35.00 membership fee on credit account, cardholder did not realize that they still had to pay the bare minimum $10.00 monthly required credit card payment
- This excuse will fly with most mortgage underwriters
However, a letter of explanation stating that borrower forgot to make monthly credit payments will only show that mortgage applicant is financially irresponsible to the underwriter.
FHA Loans With Recent Late Payments With Recent Late Payments And Mortgage Approval
Just because borrower had recent late payments does not automatically disqualify them for home loans:
- Many lenders do have their own overlays when it comes to recent late payments
- However, if loan officer can submit mortgage loan application and credit report to either Fannie Mae’s or Freddie Mac’s Automated Underwriting System and get an approve/eligible per DU or LP FINDINGS, then borrowers are set to go with a lender with no overlays
GCA Mortgage Group is a direct lender with no overlays and will just go off the automated approval findings.
Late Payments After Bankruptcy And Foreclosure
Home Buyers who recently gone through a recent bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, please make sure to religiously pay all monthly credit payments on time and never be late.
- Most lenders do not want to approve borrowers with late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
- Most lenders want to see the loan applicant with re-established credit and no late payments after they have gone through their bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
- The best way to re-establish credit is by getting three to five secured credit cards with at least $500 credit limits
- The higher the credit limit of your secured credit card the better
If you have bad credit, each one of the secured credit cards you get will definitely boost credit scores and credit scores will eventually improve as credit cards ages with time.
Choosing A Lender With No Overlays For Borrowers Who Need To Qualify For FHA Loan With Recent Late Payments
Nobody can give you a yes or no answer to the question “Can I Qualify For FHA Loans With Recent Late Payments”.
- However, not every lender will have the same underwriting guidelines
- Every lender has their own mortgage guidelines called lender overlays and some lenders are tougher than others when it comes to approving FHA Loans with Recent Late Payments
- Just because you meet FHA Guidelines and get an approve/eligible per Automated Underwriting System does not mean that you will qualify for a FHA Loan especially FHA Loans with recent late payments
- There is nothing on the HUD 4000.1 FHA Handbook that states that borrowers do not qualify for FHA Loans with recent late payments
- The great news is Gustan Cho Associates has no overlays on government and conventional loans
- With an approve/eligible per automated findings, we will approve FHA Loan even with recent late payments
- However, lenders with overlays will leave that decision up to the mortgage underwriter
- The chances are that they will most likely deny applicant
Borrowers with recent late payments and need to qualify for a FHA Loan, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for a faster response. Borrowers can also email us at firstname.lastname@example.org.