Home Loans in South Carolina For Homebuyers With Bad Credit

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will cover and discuss home loans in South Carolina for homebuyers with bad credit and low credit scores. Not all South Carolina mortgage lenders have the same lending requirements on government and conventional loans. Most lenders in South Carolina will have higher lending requirements called lender overlays on FHA, VA, USDA, and conventional loans. Not all mortgage lenders in South Carolina offer non-QM and non-prime loans. Gustan Cho Associates are mortgage brokers licensed in 48 states with a large presence in South Carolina. Over 75% of our borrowers are folks who could not qualify at other mortgage companies due to lender overlays, last-minute mortgage loan denials, or because other lenders did not have the mortgage loan product the borrower needed.

What Are The Best Home Loans in South Carolina For Bad Credit?

Gustan Cho Associates has a wide variety of mortgage options for bad credit borrowers. We have no lender overlays on government and conventional loans and offer non-QM loans. A large percentage of our borrowers are folks we qualify and approve for FHA, VA, and non-QM loans with credit scores down to 500 FICO scores. Outstanding collections and charged-off accounts do not have to qualify for primary home loans. The best home loans in South Carolina for bad credit are FHA loans. The team at Gustan Cho Associates are experts in helping borrowers get approved for a mortgage after bankruptcy in South Carolina. GCA Mortgage has a reputation for being able to do loans other lenders cannot do.

Can I Get Approved With a Different Lender If Being Denied By A Lender?

Mortgage Lenders in South Carolina have different lending requirements on FHA, VA, USDA, and Conventional loans. One lender may deny a borrower with a 600 credit score because that lender requires a 620 credit score but a different lender will approve a borrower with a 580 credit score all day long. Many mortgage borrowers and real estate professionals are under the assumption that all government and conforming loan requirements in South Carolina are uniform. Many are under the assumption that FHA, VA, and USDA loans are government-backed mortgages so all lenders should have the same lending requirements. This is not true. Lenders can have different lending guidelines for the same loan program. The best home loans in South Carolina for homebuyers with low credit scores are FHA, VA, and non-QM loans

What Are The Requirements For FHA Loans in South Carolina?

The best home loans in South Carolina for bad credit are FHA loans. You can get an FHA loan with credit scores down to 500 FICO. All lenders in South Carolina require borrowers to meet the minimum HUD agency mortgage guidelines on FHA loans. Lenders need to meet the minimum agency mortgage guidelines of HUD in order for the FHA  loans they originate and fund to be insured by HUD in the event the borrower defaults. Individual lenders can have higher lending requirements that surpass the minimum agency HUD guidelines called lender overlays. Gustan Cho Associates has zero lender overlays on FHA loans.

Do Lenders Have Different Requirements For The Same Mortgage Program?

Are All Lenders The Same
Not all lenders have the same loan requirements on FHA loans in South Carolina

Individual lenders can have higher lending requirements that are above and beyond the minimum HUD agency mortgage guidelines. These higher lending requirements that surpass the minimum agency HUD guidelines are called lender overlays. Lenders can have lender overlays on just about anything. Lender overlays on credit scores, debt to income ratio, gift funds, collections, and charged-off accounts are very typical lender overlays by mortgage companies.

Home Loans in South Carolina For 500 FICO Borrowers

HUD allows borrowers with credit scores as low as 500 FICO to be eligible for an FHA loan. Lenders do not have to accept borrowers with under 580 credit scores as part of their lender overlays. Understanding the difference between agency guidelines versus lender overlays is very important for borrowers with less than perfect credit. If one lender says you do not qualify for an FHA loan does not mean that another lender will not approve you. We will cover the difference between agency guidelines versus lender overlays in the next paragraph.

Home Loans in South Carolina For High Debt-To-Income Ratio Homebuyers

Home Loans in South Carolina

The only income that has been verified and documented can be used as qualified income for home loans in South Carolina. You cannot use cash or undocumented cash. Many home buyers in South Carolina have issues with a high debt-to-income ratio. The best home loans in South Carolina for a high debt-to-income ratio are FHA and VA loans.

Can I Get Denied For a Mortgage After Being Pre-Approved?

This happens all the time. Over 75% of our borrowers at Gustan Cho Associates are folks who got denied from other lenders and get qualified, approved, and close on their home loans with us. Not all South Carolina lenders have the same lending requirements on FHA loans. Most lenders have lender overlays on FHA loans in South Carolina. Lender overlays are lending requirements that are higher lending guidelines above and beyond the minimum agency HUD mortgage guidelines. Not all mortgage lenders have the same lender overlays. Each lender can have its own lender overlays. The minimum credit score requirement to qualify for a 3.5% down payment home purchase FHA loan is 580 FICO.

Best South Carolina Mortgage Lenders For Bad Credit

One lender may require a 620 FICO, while another lender may require a 640 credit score These higher credit score requirements by mortgage lenders are called overlays. The maximum debt to income ratio allowed to get an approve/eligible per automated underwriting system in South Carolina is 46.9% front-end and 56.9% back-end. However, most lenders require lower debt-to-income ratio caps. Some require a 31% front-end and 40% back-end debt to income ratio or lower than the maximum DTI allowed by HUD. Again, these stricter lending requirements are lender overlays imposed by individual lenders.

Reason For Last-Minute Denial on Home Loans in South Carolina

The main reason for last-minute denials in home loans in South Carolina is because the loan officer issued a pre-approval based on agency guidelines on the automated underwriting system and ignored the lender overlays. Lender overlays are mortgage guidelines imposed by the lender that is higher than the agency guidelines. Mortgage companies can implement any type of lender overlays. Each lender can have its own type of lender overlays. Some lenders may have lender overlays on gift funds while other lenders may not. Some lenders may require a borrower cannot to use gift funds for the down payment and/or closing costs unless they have a 640 credit score while other lenders may not care about gift funds.

Overlays on Home Loans in South Carolina by Mortgage Lenders

Below is a list of typical lender overlays imposed by mortgage companies:

  • Credit score requirements
  • Not accept borrowers with a certain credit score such as not accepting borrowers with under 580 credit scores
  • Not accept manual underwriting on FHA loans
  • HUD allows borrowers with outstanding collections and/or charged-off accounts to qualify for FHA loans but lenders can require collections and/or charged-off accounts need to be paid off
  • Have a certain credit score requirement for borrowers who are getting gift funds for the down payment and closing costs
  • There are no waiting period requirements after the Chapter 13 Bankruptcy discharged date but lenders can require a one year or two-year waiting period requirement
  • HUD allows employment gaps in the past two years but lenders can have lender overlays requiring two years of employment with the same employer
  • Not accepting employment offer letter mortgages
  • Requiring verification of rent

In the next paragraph, we will discuss and cover the minimum agency HUD mortgage guidelines.

HUD Agency Mortgage Guidelines On FHA Loans In South Carolina

HUD Agency Mortgage Guidelines On FHA Loans In South Carolina

Lenders need to make sure all borrowers meet the minimum HUD agency mortgage guidelines if they want to get insured on all of their FHA loans. Here are the minimum agency mortgage guidelines on FHA loans:

  • The minimum credit score of 580 FICO for a 3.5% down payment home purchase FHA loan
  • Borrowers with credit scores between 500 to 579 FICO are eligible for FHA loans but need a 10% down payment versus a 3.5% down payment
  • Need timely payments for the past 12 months to get an approve/eligible per automated underwriting system on FHA loans
  • Borrowers with no credit scores are eligible to qualify for an FHA loan with non-traditional credit
  • Non-traditional credit is alternative credit such as utilities, cell phone, insurance, educational payments, or other creditors that do not report to the three credit reporting agencies
  • One to four-unit residentially zoned owner-occupant primary homes
  • Property needs to meet the minimum HUD property standards and be safe, secure, and habitable
  • One time 1.75% upfront FHA mortgage insurance premium that can be rolled into the loan balance and a 0.85% annual mortgage insurance premium for the life of a 30-year fixed-rate FHA mortgage

The above are the basic HUD agency mortgage guidelines in South Carolina. Again, if you meet the above agency HUD mortgage guidelines and are told you do not qualify for a loan by one lender, then you should realize that you can qualify for an FHA loan with a different lender with no lender overlays. Gustan Cho Associates has no lender overlays on FHA loans in South Carolina.

The Best Mortgage Lenders For FHA Loans After Bankruptcy

HUD guidelines require a two-year waiting period after Chapter 7 Bankruptcy to be eligible for an FHA loan. Borrowers should have rebuilt and re-established credit after the Chapter 7 Bankruptcy discharged date with no late payments. Borrowers who are in a Chapter 13 Bankruptcy repayment plan are eligible to qualify for an FHA loan after they have been in the repayment plan for at least 12 months and bankruptcy trustee approval.

Home Loans in South Carolina During and After Chapter 13 Bankruptcy

It needs to be a manual underwrite. Most trustees will approve a home loan during the Chapter 13 Bankruptcy repayment plan. You do not need to have the Chapter 13 Bankruptcy discharged but you do need timely payments during your repayment plan. There is no waiting period after the Chapter 13 Bankruptcy discharged date. However, if your Chapter 13 Bankruptcy discharge has not been discharged for at least 24 months, it needs to be a manual underwrite. Gustan Cho Associates are experts in helping borrowers qualify and get approved for an FHA loan during and after bankruptcy.

Home Loans in South Carolina After Foreclosure, Deed In Lieu Of Foreclosure, Short-Sale

You can qualify for home loans in South Carolina after foreclosure, deed in lieu of foreclosure, and/or short-sale. There are waiting period requirements after a housing event. Here are the waiting period requirements after a housing event in South Carolina:

  • There is a three-year waiting period after foreclosure, deed in lieu of foreclosure, and short sale to qualify for an FHA loan in South Carolina.
  • There is a two-year waiting period after foreclosure, deed in lieu of foreclosure, and short sale on VA loans
  • There is a four year waiting period after a deed in lieu of foreclosure, and/or a short-sale to qualify for a conventional loan
  • There is a seven year waiting period after a foreclosure to qualify for conventional loans
  • There is a three-year waiting period requirement after foreclosure, deed in lieu of foreclosure, and a short sale to qualify for USDA loans.

Borrowers should rebuild and re-establish their credit after a housing event. Under no circumstances should a borrower have a late payment after a foreclosure, deed in lieu of foreclosure, or short-sale if they want to qualify for a mortgage after a housing event. If the borrower cannot wait until passing the waiting period after foreclosure, deed in lieu of foreclosure, or short-sale, Gustan Cho Associates has non-QM mortgages one day out of bankruptcy and/or foreclosure for homebuyers with a 30% down payment.

Best Mortgage Lenders For First-Time Homebuyers With Bad Credit

South Carolina FHA Lenders With No Lender Overlays

The team at Gustan Cho Associates are experts in helping homebuyers qualify for a mortgage after foreclosure, deed in lieu of foreclosure, and short-sale in South Carolina. FHA loans are the most popular home mortgage loan program in South Carolina for first-time homebuyers, borrowers with prior bad credit, and borrowers with lower credit scores. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to those lenders having overlays on government and conventional loans. We help thousands of first-time homebuyers, borrowers with credit scores down to 500 FICO, and homebuyers who are in an active Chapter 13 Bankruptcy repayment plan. If you have any questions about the content in this article or need to qualify for an FHA loan in South Carolina, please contact us at 262-716-8151 or email us at [email protected] Text us for a faster response. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.