Florida FHA Loan With Bad Credit And High DTI

This BLOG On Qualifying For Florida FHA Loan With Bad Credit Was UPDATED On May 25, 2017

Home buyers can now qualify Florida FHA Loan With Bad Credit, high debt to income ratios, and outstanding collections & charge off accounts with The Gustan Cho Team.

  • Most mortgage loan applicants do not bother trying to get qualified for FHA Loans in Florida because they are under the assumption that they need high credit scores, no outstanding collections & charge off accounts, larger down payment, and lower debt to income ratios.
  • There are government and conventional loan programs as well as NON-QM Loans (also referred to as ALT-A, subprime mortgages, and alternative financing.
  • The U.S. Department of Housing and Urban Development (HUD) is the parent of FHA.
  • FHA is not a lender.
  • FHA is a government agency where its mission is to insure FHA Loans originated and funded by banks and private lenders in the event FHA Borrowers default on their FHA insured home loans and it goes into foreclosure.
  • How about if a mortgage loan borrower has NO CREDIT in applying for Florida mortgages? 

Florida FHA Loan With Bad Credit And NO Credit Tradelines

Credit is an important factor when it comes to qualifying for mortgages. In order to have higher credit scores, consumers need to have active credit accounts. Consumers with no credit or active credit tradelines will not have higher credit scores. One of the reasons that hinder credit score improvements is not having any active credit tradelines.

  • Credit scores is what determines what mortgage interest rates borrowers will get.
  • The lower the borrower’s credit scores are, the higher the interest rates.
  • Lenders use credit scores as a tool to determine the credit risk of borrowers.
  • Borrowers with lower credit scores are judged as being higher risk borrowers.
  • Many consumers believe that paying everything with cash is the best way to have their financial habit but this can end up hurting consumers.

Credit payment history and credit scores determine the following:

  • Insurance companies will determine insurance premiums by the insurance applicant’s credit scores.
  • Many employers use credit and credit scores in their hiring and promotion process.

Having no credit is not good.

  • It is tough to get a Florida mortgage loan approved for a mortgage loan borrower who has no credit. 
  • No credit is almost as bad as bad credit and maybe worse.  
  • Florida mortgage loan borrowers who have bad credit and lower credit scores can easily boost their credit scores by paying down their credit  card balances, paying off the collections if they have any, and by contesting the inaccuracies to the credit bureaus in hopes of getting the derogatory credit items deleted off credit report.  
  • Home buyers do not have to pay outstanding collections and/or charge offs to qualify for FHA Loans.
  • Consumers can easily boost their credit scores and start establishing and/or re-establishing their credit by getting three secured credit cards with at least a $500 credit limit.
  • Home buyers with no credit tradelines and/or no credit scores can qualify for Florida Home Loans With No Credit with Gustan Cho Associates with the use of non-traditional credit tradelines.

Importance Of Credit With Qualifying For FHA Loans In Florida

What does a Florida mortgage loan borrower with no credit need to do to qualify for Florida mortgages?

  • Borrowers can qualify for Florida FHA Loan With Bad Credit and no credit with non-traditional credit tradelines in lieu of traditional credit tradelines.
  • Advice to instantly boost credit scores is to apply and get 3 secured credit cards.
  • Borrowers with no credit scores will get credit scores right away by obtaining new credit.
  • Best way of establishing and re-establishing credit after bankruptcy and/or foreclosure is by getting secured credit cards.
  • Secured credit cards after bankruptcy and/or foreclosure or after periods of bad credit will boost consumer credit scores into the high 700s or low 800s within a short period of time.
  • Most lenders want a minimum of a one year history of credit and a minimum of 3 tradelines. 
  • The minimum credit tradeline requirement is not a mortgage guideline requirement but it is a lender overlay on the individual mortgage company.

Qualifying For Florida FHA Loans With Non-Traditional Credit Tradelines

One option Florida mortgage borrowers with no credit have is that some lenders will accept nontraditional tradelines as credit but would require proof like cancelled checks. Non-Traditional Credit Tradelines are credit obtained by consumers but the creditors do not report the payment history on the three major credit reporting agencies: Experian, Equifax, Transunion.

  • One source of non-traditional credit Florida mortgage lenders will accept would be rent payments, also called VOR (Verification Of Rent).
  • If they have cancelled checks that has been paid to their landlord for the monthly rent payment for the past 12 months, that can be accepted as a compensating factor and strong credit tradeline. 
  • Since I specialize in helping Florida mortgage loan borrowers who have bad credit, I have wholesale correspondent lenders who will accept non-traditional credit like rent payments. 

Example Of Non-Traditional Credit Tradelines

Here are some examples of non-traditional credit:

  • 12 months rent payments
  • Utility payments for 12 months
  • Cell phone or landline phone payment for past 12 months
  • 12 months of insurance payments
  • Tuition payments for the past 12 months
  • Other nontraditional credit payment history

All non-traditional credit tradelines needs proof of payment for past 12 months and need to have been paid timely with no late payments.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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