This Article Is About Home Loan With Bad Credit In Indiana With No Overlays. Indiana home values are skyrocketing. The booming housing market is experiencing strong demand for homebuyers and keeping builders very busy. There is more demand for homes versus inventory. Indiana has one of the highest population growth of any other state in the nation. The state’s great economy, affordable housing, low property taxes, and low cost of living is attracting tens of thousands of people from all over the United States. The state has come a long way since the 2008 Real Estate and Mortgage Meltdown. Individuals and businesses are migrating to Indiana due to the great economy, and affordable cost of living. Home sales in Indiana is strong and is forecasted to remain strong going into 2022.. Many parts of Indiana such as Indianapolis, Valparaiso, Crown Point have seen steady home price increases in the past several years. Other areas of Indiana have seen property values increase due to high demand.

Homebuyers Migrating To Indiana Due To Affordable Housing

Indiana has lower taxes, affordable housing, and a robust economy than other states. Many taxpayers from other high-taxed states migrate to Indiana due to affordable housing, low taxes, lower cost of living, and great job opportunity. You can get a lot of house for the money in Indiana. Illinois taxpayers are migrating to Indiana due to the high taxes and increasing property taxes. Property taxes in Indiana is a fraction of the taxes in Illinois.

There are many Illinois residents who live on the border of Illinois and Indiana who have been selling their homes in Illinois and buying homes across the border in Indiana due to low property taxes in Indiana versus property taxes in Illinois. The Southeast side of Chicago and many south suburban areas of Chicago where it is close to the Indiana border have property taxes higher than $7,000 on homes that are priced in the $100,000 to $150,000 range. By buying a home in Indiana, which is 15 minutes to 30 minutes commute, homebuyers in the state of Indiana can lower their property taxes to a fraction of that. Property taxes in Indiana is less than $1,200 compared to comparable homes in Illinois.

In this article, we will cover and discuss qualifying for a mortgage with bad credit in Indiana.

FHA Loans In Indiana

We specialize in helping home buyers seeking a home loan with bad credit in Indiana. FHA loans are the most popular loan program for first-time homebuyers, borrowers with prior bad credit, and homebuyers with credit scores down to 500 FICO.  The minimum down payment requirement for an Indiana home buyer is a 3.5% down payment on FHA loans.  To qualify for a 3.5% down payment home purchase FHA loan, borrowers need a 580 credit score. Borrowers can qualify for an FHA loan with credit scores down to 500 FICO. However, you need to get an approve/eligible per automated underwriting system or meet the manual underwriting guidelines to be eligible to qualify for an Indiana FHA loan with bad credit and lower credit scores. The key to getting an approve/eligible per AUS on an FHA loan with a lower credit score and/or low credit score is to have timely payments in the past 12 months. HUD manual underwriting guidelines require 24 months of timely payments. You can have outstanding collections and charged-off accounts that are not paid but you need timely payments in the past 12 months.

VA Loans In Indiana With Low Credit Scores

VA loans are very forgiving on borrowers with prior bad credit and lower credit scores. There are no minimum credit scores or maximum debt to income ratio to qualify for VA Loans in Indiana. Borrowers with credit scores down to 500 FICO and high debt to income ratio can qualify for a VA loan in Indiana as long as they get an automated approval per AUS. To get an approve/eligible on VA Loans Indiana with low credit scores, you need to have been timely on all of your payments for the past 12 months. Borrowers can have a debt to income ratio exceeding 60% DTI with lower credit scores and get an approve/eligible per automated underwriting system. Having sufficient residual income is key for borrowers with high debt-to-income ratios in getting an AUS approval.

Indiana Lenders Of Government And Conventional Loans

Not all mortgage lenders in Indiana have the same lending requirements on government and conventional loans. Lenders need to meet the minimum agency guidelines on FHA, VA, USDA, and conventional loans. However, each individual mortgage company can have higher lending requirements that is above and beyond the minimum agency mortgage guidelines. The higher lending requirements are called lender overlays. Gustan Cho Associates is a no-lender overlay Indiana licensed mortgage company. We have zero lender overlays on FHA, VA, USDA, and Conventional loans. Gustan Cho Associates just go off by the automated findings by the automated findings of the Automated Underwriting System. Gustan Cho Associates has no zero overlays. Most banks, credit unions, and other Indiana mortgage companies have lender overlays on government and conventional loans. Over 75% of our borrowers are mortgage loan applicants who were told they did not qualify due to the mortgage lender overlays. Mortgage companies can have higher lending requirements on credit scores, debt to income ratio, or other lending guidelines. We will cover and discuss typical lender overlays by lenders in the next paragraph.

What Are Mortgage Lender Overlays Imposed By Indiana Mortgage Companies

Mortgage Lender Overlays are conditions and guidelines that a mortgage company or bank imposes on top of the federal minimum lending guidelines. For example, the minimum credit score required to qualify for an FHA loan in Indiana is 580 FICO. Per HUD agency mortgage guidelines, the mortgage loan applicant meets the minimum HUD lending guidelines for an Indiana home purchase with a 3.5% down payment. However, an Indiana bank may have its own overlay that requires borrowers to have a higher credit score. The lender may require a 620 or higher credit score requirement on FHA loans with their institution. Some lenders will require a 640 or higher credit score. Borrowers with a 580 credit score will get denied an FHA loan in Indiana by mortgage companies with higher credit score requirements.

Home Loan With Bad Credit In Indiana: Getting Denied For A Mortgage By Lenders Due To Lender Overlays

Lenders with overlays will not accept a mortgage loan application for an FHA loan if the borrower does not meet the higher credit score requirement of their institution. If the lender has a 640 credit score requirement overlays on FHA loans, a 580 credit score borrower will not qualify for an FHA loan with them even though the borrower meets the HUD agency guidelines and has an approve/eligible per AUS. The 640 credit score requirement this lender has is a lender overlay on credit scores which is higher than the minimum HUD agency requirements on FHA loans. Lenders can have any type of lender overlays. Not all mortgage companies have the same lender overlays. One lender may have overlays on certain credit/income factors while another lender may not. Understanding the basic agency mortgage guidelines is important for borrowers with less than perfect credit and/or those with credit issues. Just because one lender says no does not mean they do not qualify at a different lender. There are mortgage companies like Gustan Cho Associates that have zero lender overlays on government and conventional loans.

Can I Qualify For A Mortgage With Outstanding Collections And Charged-Off Accounts?

Most owner-occupant loan programs do not require outstanding collections and/or charged-off accounts to be paid. HUD is the most forgiving agency for borrowers with larger prior collection accounts. It is easier to get an approve/eligible per automated underwriting system on FHA loans than other loan programs.  HUD does not require unpaid collection and charged-off accounts to be paid in order to qualify for an Indiana FHA loan. Borrowers can have an unpaid collection and charge off accounts and still qualify for an FHA loan in Indiana without having to have it paid in full. However, most banks and mortgage companies will have overlays on collection accounts. Overlays on collections will require borrowers to pay it off before they will accept you or else they will not even accept a mortgage loan application. Indiana home buyers looking for a home loan with outstanding collections need to realize the importance of getting an automated approval per AUS. If you get an approve/eligible with outstanding collections but get denied by a lender, you qualify for an FHA loan. You just need to find a different lender with no lender overlays on collections and/or charged-off accounts.

FHA And VA Manual Underwriting Guidelines In Indiana

FHA and VA loans are the only two loan programs that allow manual underwriting. Borrowers who cannot get an approve/eligible per automated underwriting system but get a refer/eligible can qualify for a manual underwrite. A human mortgage underwriter gets assigned to the file on a manual underwrite. The only difference between an automated approved file and a manual underwrite is the underwriter will scrutinize the file more in detail and the debt to income ratio caps are lower. The maximum debt to income ratio on manual underwrites is 40% front end and 50% front end with two compensating factors. Without any compensating factors, the front-end debt to income ratio is 31% and the back-end is 40%. With one compensating factor, the maximum front-end debt-to-income ratio is 37% and the back-end debt-to-income ratio is capped at 47%. Compensating factors are positive factors that offset the risk of manual underwrites. Click this link on manual underwriting to understand the list of what is considered compensating factors. One month of reserves (PITI) is required on all manual underwrites.

Indiana Mortgage Lender With No Lender Overlays On Government And Conventional Loans

Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays and licensed in the State of Indiana. Our team of loan officers has helped countless home buyers in Indiana. Our specialty is helping home buyers seeking a home loan with bad credit in Indiana. Our expertise is helping borrowers get qualified and approved for a home mortgage with no lender overlays. Over 75% of our borrowers are borrowers who could not qualify at other lenders or gotten a last-minute mortgage loan denial. The team at Gustan Cho Associates are experts in helping homebuyers during Chapter 13 Bankruptcy repayment plan. We can help homebuyers qualify and get approved for VA and FHA Loans During and After Chapter 13 Bankruptcy and manual underwriting.

Gustan Cho Associates also handles many mortgage loan applicants who need manual underwriting. We are experts in helping borrowers with poor credit and low credit scores. Indiana Home Buyers who need to qualify for a mortgage with a national lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.