Florida FHA Loans With Bad Credit

Florida FHA Loan With Bad Credit And High Debt To Income Ratio

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Florida FHA Loan With Bad Credit And High Debt To Income Ratio

Homebuyers can now qualify for Florida FHA Loan With Bad Credit, high debt to income ratios, and outstanding collections & charge-off accounts with Gustan Cho Associates. 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 payments, 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 Borrowers default on their loans and it goes into foreclosure. How about if a mortgage loan borrower has NO CREDIT in applying for Florida mortgages?

In this article, we will discuss and cover qualifying for an FHA loan with bad credit and high debt to income ratios.

Florida FHA Loan With Bad Credit And No Credit Tradelines

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 are 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.

Importance Of Credit And Credit Scores 

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 borrowers with no credit. No credit is almost as bad as bad credit and maybe worse.

Florida borrowers with bad credit and lower credit scores can easily boost their credit scores by doing the following:

  • paying down their credit card balances
  • paying off recent collections if they have any
  • contesting the inaccuracies to the credit bureaus in hopes of getting the derogatory credit items deleted from the credit report

Homebuyers 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

Homebuyers 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

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
  • The 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:

  • 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 canceled 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 lenders will accept would be rent payments, also called VOR (Verification Of Rent). If they have canceled checks that have 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 The Team at Gustan Cho Associates specializes in helping borrowers with bad credit, we have investors who 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 the 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 need proof of payment for the past 12 months and need to have been paid timely with no late payments.

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