In this article, we will cover and discuss qualifying for FHA loans with under 620 FICO in Utah with outstanding collection and charged-off accounts. There is a huge market for borrowers who need to get approved for FHA loans with under 620 FICO in Utah. One thing borrowers do not realize is that not all lenders have the same FHA loan requirements. One lender may require a 640 credit score while another lender requires a 580 credit score.
Why Choose Gustan Cho Associates For FHA Loans With Under 620 FICO in Utah?
The team at Gustan Cho Associates gets so many phone calls daily that the first question the borrowers ask me is ” Can I Qualify For FHA Loans With Under 620 FICO in Utah?” Gustan Cho Associates has no overlays on government and conventional loans. Gustan Cho Associates are experts in originating and funding FHA loans with under 620 FICO in Utah. In this ARTICLE, we will cover and discuss qualifying for FHA loans with under 620 FICO in Utah with outstanding collections and charged-off accounts.
Finding a Lender For FHA Loans With Under 620 FICO in Utah With No Overlays
Gustan Cho Associates can offer homebuyers who need to qualify for FHA Loans With Under 620 FICO in Utah. HUD requires a 580 FICO credit score for a borrower to qualify for a 3.5% down payment FHA Loan. However, most FHA mortgage lenders do have higher credit score requirements. For example, most banks require a 640 credit score while most mortgage companies will require a minimum of 620 FICO. A substantial percentage of my borrowers qualify for FHA Loans With Under 620 FICO in Utah.
Over 75% of Our Borrowers Are Folks Who Could Not Qualify at Other Lenders
The team at Gustan Cho Associates are experts in helping homebuyers qualify for FHA Loans With Under 620 FICO in Utah. We can go down to 500 credit scores. Gustan Cho Associates is a five-star mortgage broker licensed in multiple states. Most of the loans close in 21 days or less. Gustan Cho Associates has no overlays on government and conventional Loans. Our underwriters will only go off DU/LP FINDINGS. Lender overlays are when a bank or lender has additional requirements than those set by HUD, VA, USDA, GINNIE MAE, FANNIE MAE, and FREDDIE MAC. Here is a link about getting FHA LOANS under 620 FICO in Utah that may be helpful for homebuyers who were told that they do not qualify due to having under 620 FICO credit scores:
How Can I Qualify For FHA Loans With Under 620 FICO in Utah
When borrowers ask their local loan officer at their local bank ” Can I Qualify For FHA Loans With Under 620 FICO in Utah”, the banker’s response will probably say NO. Most of them do not reply that you do not qualify with their bank but you may qualify with another lender that has no lender overlays on credit scores.
Why Lenders Deny Utah Homebuyers on FHA Loans
Most lenders do not explain to the borrower who visits or contacts them that FHA minimum credit score requirements are 580. It is a shame that there are folks out there who meet the minimum FHA Guidelines on credit scores but are told that do not qualify by the lender after lender. These lenders do not tell them that they do not qualify with them but may qualify somewhere else. 75% of our borrowers are borrowers who were told that they do not qualify or were denied a loan at the last minute due to the lender overlays by their lender.
Understanding Lender Overlays Versus Agency Guidelines
Having credit scores under 620 FICO does have disadvantages for the borrower and if at all possible. I try to help all of my borrowers get their credit scores up if there are quick fixes like paying down their credit cards. Adding borrowers to a family member and/or close friend as an authorized user are ways of boosting credit scores. Getting secured credit cards is the fastest and easiest way of re-establishing and boosting your credit scores. I can touch on the above tips shortly but if a borrower has under 620 FICO, the maximum debt to income ratio allowed per HUD is 43% DTI to get an approve/eligible per automated findings.
Mortgage Rates on FHA Loans With Under 620 FICO in Utah
If credit scores are 620 FICO or higher, then the maximum back-end debt to income ratio allowed to get an automated approval per Automated Underwriting System is a back-end debt to income ratio of 56,9% DTI. The front-end DTI is capped at 46.9% DTI to get an automated approval per AUS. Borrowers with higher debt to income ratios may need to try to get their credit scores to at least 620 FICO and again, there are some quick fixes that their loan officer can help with to boost credit scores. Disputing medical collections is one quick fix I use which I can explain in later blogs.
Meeting AUS Conditions With FHA Loans With Under 620 FICO in Utah
Another major issue with FHA loans with under 620 FICO in Utah is the automated underwriting system will consider the borrower as high risk. Here are some conditions the Automated Underwriting System may condition:
- The AUS may or may not condition VOR.
- Automated Underwriting System may ask for Verification Of Rent which is proof that the borrower has paid their monthly rent payments with either a bank check and/or wire the funds from their bank account to their landlord
- If paying with a check, then the lender will require 12 months of canceled checks
- The renter cannot have been late with their rental payment in the past 12 months
- If the renter has paid their rental payment via bank wire to their landlord, then 12 months’ bank statements will need to be provided where it shows the monthly rental payment being wired out of their account into the landlord’s bank account
If the renter has paid their rental payment with cash and gotten a cash payment receipt payment from their landlord, that does not count and is not considered proof of rental verification.
Conditions Requested By The Automated Underwriting System
Borrowers who have credit scores under 620 FICO and the automated approval conditions for rental verification and cannot provide it cannot qualify for an FHA loan. This is because they need to meet all of the conditions of the Automated Underwriting System. This ends up hurting homebuyers who are living with the family and trying to save their down payment money for a home purchase. When this happens, the loan officer should be able to guide you in boosting credit scores to at least 620 FICO where the AUS will not require verification of rent.
Loan Process On FHA Loans With Under 620 FICO in Utah
The answer is YES to the question of Can I Qualify For FHA Loans With Under 620 FICO in Utah. As mentioned, a large percentage of my borrowers have credit scores under 620 FICO. However, there are negatives to having lower credit scores. Besides having a lower debt to income ratio cap of 43% DTI versus a 56.9% DTI cap on borrowers with at least a 620 FICO credit score, and the potential of the Automated Underwriting System requiring verification of rent, the AUS can also require one month of PITI ( PRINCIPAL, INTEREST, TAXES, INSURANCE ) in reserves. Reserves cannot be gifted.
Gift Fund Guidelines on FHA Loans With Under 620 FICO in Utah
FHA does allow 100% gift funds from family members to gift borrowers for their home purchases. However, gift funds are not viewed favorably. There are many times when if borrowers have credit scores under 580 FICO, the Automated Underwriting System may not allow gift funds. Borrowers with under 620 FICO credit scores will get higher mortgage interest rates on an FHA loan. This holds true even though FHA Loans are insured by HUD, the U.S. Department of Housing and Urban Development.
Tips In Improving Credit Scores To Qualify For FHA Loans With Under 620 FICO in Utah
There are ways of boosting credit scores in a very short period of time. Borrowers with maxed-out credit cards need to pay them down preferably below the 10% of the credit limit. However, do not pay it down to a zero balance. Leave $10 dollars or so in there to maximize credit scores. Leaving a few dollars on a credit card will maximize credit scores than having a zero balance. There are many consumers who always pay their bills on time but still have a low credit score. The reason for this is because they do not have any credit tradelines which are having credit cards or other debt obligations where they have had an on-time payment history for at least 12 months.
Borrowers Can Boost Credit Scores With Quick Credit Fixes
Those who have low credit scores due to not having any credit reporting on their credit report can instantly boost their credit scores by adding themselves as an authorized user on a family member and/or friend’s credit card. However, make sure that the person they are adding themselves to as an authorized user has perfect payment history and a very low credit card balance, otherwise, it will hurt them more than help.
Re-Establishing And Boosting Credit Scores With Secured Credit Cards
Consumers with poor credit or who have recently gone through bankruptcy and/or foreclosure can get secured credit cards to re-establish their credit. Secured credit cards are the easiest and fastest way of not just re-establishing credit, but also boosting credit scores. Make sure to get at least a $500 credit limit secured credit card. Preferably a $1,000 limit credit card for faster optimization. The higher the credit limit, the better it is. For maximum optimization, try to get three secured credit cards.
How Fast Can You Boost Credit Scores To Get Lower Rates
Borrowers with low credit scores can potentially increase credit scores by 20 to 60 plus FICO points by getting secured credit cards. I have seen borrowers’ credit scores boost over 30 points with just one secured credit card. Borrowers who are told they do not qualify for an FHA loan by a lender or multiple lenders for not having a 620 or higher credit score, can rest assured that they can qualify for FHA loans with Gustan Cho Associates.
Not All Lenders In Utah Have The Same Guidelines on FHA Loans
Borrowers may not qualify with that particular lender but do qualify with an FHA mortgage lender like myself that has no lender overlays. There are plenty of mortgage lenders like myself so all you need to do is Google FHA LENDERS WITH NO OVERLAYS and borrowers will see lists after lists of lenders with no lender overlays.
Best Mortgage Lender For FHA Loans With Under 620 FICO in Utah With No Overlays
Gustan Cho Associates has no overlays on FHA loans. Here are borrowers who can qualify with us at Gustan Cho Associates Mortgage Group:
- Closings in 21 days or less
- Borrowers do not have to pay outstanding collections or charge offs to qualify for an FHA Loan
- 580 FICO score to qualify for an FHA loan with a 3.5% down payment
- Non-occupant co-borrowers are allowed and no limit as to how many non-occupant co-borrowers can have
- Borrowers in a Chapter 13 Bankruptcy Repayment Plan can qualify one year into the Chapter 13 Bankruptcy with the approval of the Chapter 13 Bankruptcy Trustee
- No waiting period after Chapter 13 Bankruptcy discharged date
- Gustan Cho Associates will work with borrowers with under 580 Credit Scores to boost their credit scores and get them qualified
- The Team at Gustan Cho Associates is available 7 days, evenings, weekends, and holidays
Contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
