Home Loan With No Credit Mortgage Lending Guidelines

Home Loan With No Credit Mortgage Lending Guidelines

This BLOG On Home Loan With No Credit Mortgage Lending Guidelines Was UPDATED On February 4th, 2019

Challenges With Trying To Qualify For Home Loan With No Credit:

  • There are mandatory waiting period after filing for bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale to qualify for mortgages.  
  • The waiting period after bankruptcy or a housing event depends on the mortgage program.
  • For those first time home buyers or seasoned home buyers who are seeking to get qualified for a home loan with bad credit, there is a mandatory two year waiting period after the discharge date of Chapter 13 bankruptcy to qualify for a FHA Loan
  • There is a three year waiting period after the recorded date of a foreclosure or deed in lieu of foreclosure to qualify for a FHA Loan
  • FHA requires a three year waiting period after the settlement date of the HUD settlement statement of a short sale.  
  • Borrowers can qualify for a FHA Loan one year into a Chapter 13 Bankruptcy Repayment Plan with the approval of their bankruptcy trustee.
  • There is no waiting period to qualify for a FHA Loan after Chapter 13 Bankruptcy discharged date

Conventional Mortgage Guidelines After Bankruptcy And Housing Event

Here are the waiting period requirements after bankruptcy and foreclosure on Conventional Loans.

  • Fannie Mae and Freddie Mac require a four year waiting period after a Chapter 7 Bankruptcy to qualify for Conventional Loans.
  • There is a two year waiting period after a Chapter 13 Bankruptcy discharged date to be eligible to qualify for a Conventional Loan.
  • There is a four year waiting period to qualify for a Conventional Loan after a short sale and/or deed in lieu of foreclosure.
  • There is a seven year waiting period after a standard foreclosure to qualify for a Conventional Loan
  • Borrowers with mortgage part of your Chapter 7 Bankruptcy, the waiting period is four years to qualify for a Conventional Loan after the discharged date of Chapter 7 Bankruptcy discharged date to qualify for a Conventional Loan
  • The foreclosure and/or deed in lieu of foreclosure can be recorded after the discharged of the Chapter 7

Just passing the mandatory waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale does not guarantee a mortgage loan approval.  Lenders want to see re-established credit and no late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale.

Home Loan With No Credit: Re-Establishing Credit

Most folks who have had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale most likely do not want anything to do with obtaining new credit after their financial economic event and want to deal with cash only.

  •  Unfortunately, trying to get a home loan with no credit can become challenging because most lenders require three credit tradelines
  • A credit tradeline is a open credit account that reports on the consumer credit bureaus where the consumer has a 12 months on time payment history
  • I have seen some clients who did not want anything to do with obtaining new credit after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • This is including not even getting a car loan
  • However, not re-establishing credit is not good when it comes to qualifying for a mortgage loan after a period of bad credit
  • Those seeking a home loan with no credit needs to get re-established credit and not have any late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • Just passing the mandatory waiting period will not guarantee borrowers a mortgage loan approval. 
  • Borrowers who just passed the mandatory waiting period and have no re-established credit, it will make mortgage approval process much tougher. 
  • Borrowers who are a first time home buyer or a home buyer trying to get a home loan with bad credit, re-establishing your credit after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale is a must.

How To Re-Establish Credit After Bankruptcy And Foreclosure

Those who are a first time home buyer or a seasoned home buyer who is trying to get a home loan with no credit after having a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, re-establishing your credit as soon as possible is a must.

  • The best to re-establish credit is by getting a few secured credit cards
  • Secured credit cards are the best tools in getting credit re-established
  • Three to five secured credit cards will be a great road to great credit
  • Negative derogatory credit items will have less impact on credit scores as time passes
  • After two years, most derogatory credit items will have no impact on credit scores

Having no credit will hurt credit scores. It is best that you try to get three to five secured credit cards and make sure to pay the minimum payments on time. As credit card ages, consumer credit profile will strengthen and credit scores will improve. Consumers do not need to have any credit to qualify for a mortgage. Borrowers who are trying to get qualified for a home loan with no credit, contact The Gustan Cho Team at 262-716-8151 or text us for faster response. Borrowers can email us at gcho@gustancho.com. Gustan Cho Associates at Loan Cabin Inc. has no lender overlays. As long as borrowers get an automated approval per Automated Underwriting System, we can close on mortgage loan.

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