Home Loans With No Credit Florida Mortgage Guidelines

Tips And Advice On How To Apply For Home Loans With No Credit Was UPDATED And PUBLISHED On January 25th, 2020

We have covered many blogs on how to get loans with bad credit, fair credit, good credit, as well as blog topics on how to re-establish credit with having a bad credit payment history.

• Gustan Cho Associates Mortgage Group has no lender overlays on government and conventional loans
• However, many of our viewers of Gustan Cho Associates are inquiring about advice on how to apply for a home loan with no credit history
• Many Florida home buyers are being told that they do not qualify for home loans with no credit in Florida

Florida homebuyers who do not have an established credit payment history:

• Or a credit score on their credit report can qualify for Home Loans With No Credit in Florida

In this article, we will cover and discuss qualifying for a mortgage in Florida with little to no credit tradelines.

Can Floridians Qualify For Home Loans With No Credit In Florida?

Those who already have established credit normally have no issues in getting new credit.

Even those who have bad credit and a lower credit score, they can get credit since they had a prior credit history on their credit report.

• Homebuyers can qualify for a mortgage loan even if they had prior bad credit
• Borrowers do not have to pay outstanding collection accounts and charge off accounts to qualify for FHA Loans
• However, those who never ever had any credit will have a hard time getting new credit if they do not have a single credit tradeline or credit score
• Homebuyers can qualify for home loans with no credit in Florida
• Sometimes having poor credit is better than having no credit

There are many folks who are super conservative:

• They never applied for credit just
• This is because they do not want any debts and did not want to extend themselves and only believed in buying goods and services with cash

Unfortunately, these consumers get penalized when it is time for them to apply for home loans with no credit or other types of loans.

Consumers With No Credit Tradelines

Many young consumers as well immigrants are consumers who have no credit:

Many consumers who have filed bankruptcy, went through foreclosure/short sale, or older Americans who retired their old debt:

• They did not incur any more debt closed out their credit card and other revolving accounts

These consumers paid off all of their installment accounts:

• They had no active credit activities on their credit reports for years
• They may no longer have a credit score due to not having a credit history that is recent

Qualifying For Mortgage With No Credit

The good news is that there are ways on how to apply for home loans with no credit:

• Consumers can use non-traditional credit tradelines to qualify for a mortgage

Nobody was born with any credit:

• We all had to start developing credit at one time or another

Getting credit with no credit is definitely doable:

• We will cover on advising you on how to apply for loans with no credit on this blog
• There is no one-way process and system on how to apply for home loans with no credit
• Some types of loans may require a lot more hurdles and challenges to get approved without any prior credit than other loans

The best advice for every consumer is to start developing a credit history as soon as possible if they do not have any credit.

Establish Credit History To Qualify For Home Loans With No Credit

For consumers with no credit, the best advice that I can give you is to start establishing your credit by getting new credit.

• It will be difficult for you to get any type of credit without a credit history on your credit report

The three fastest and easiest way of starting to establish and start building credit is listed below:

1. Ask a close friend or a family member who has good credit and credit cards that has been always had a timely payment history with a very low credit card balance to be added as a credit card authorized user
2. Remember that adding on someone’s credit card as an authorized credit user is ONLY EFFECTIVE if and only if with the following factors:
   • the main user of the credit card has had a perfect timely payment history
   • has a low credit card balance.
3. If the main user of the credit card has maxed out credit cards or has been late on their credit card payment history, it will hurt more than help
4. Asking a close friend or family member to co-sign for a new loan
5. Cosigning such as an auto loan or other installment loans will help establish credit with new credit
6. Get three to five secured credit cards with at least a $500 credit limit for maximum effect
7. Secured credit cards are the easiest and fastest way of establishing credit and a credit score for those who do not have the credit or have had a bad credit history

How Do Creditors And Lenders View Consumers With No Credit?

Creditors and lenders lend money and extend credit to consumers and borrowers in lieu of getting a return of the money they lend via interest.

• All creditors and lenders want to lend or extend credit
• However, they want to make sure that they get their principal and interest back
• Nobody has a crystal ball
• However, previous payment patterns and behaviors is a good indication of future performance
• A person’s credit report is exactly that

A consumer credit report will show all of the consumer’s credit payment history for the past 7 years including the following:

• late payments
• collection accounts
• charge off accounts
• outstanding debts
• amount of revolving debt available
• amount of installment loans that have been paid as well as loans that are active
• all public records such as foreclosures, bankruptcies, and judgments

The credit bureaus have their own ways of analyzing a consumer’s overall payment history, debts, types of debts, derogatories, and other financial/credit factors and coming up with a consumer’s credit score.

• Creditors and lenders base a consumer’s credit score and payment history when extending credit
• The lower the credit score, the higher the interest rate

Determining Credit Worthiness Of Borrowers Through Past Credit

Mortgage and auto lenders consider the four C’s when extending credit.

The four C’s in lending are the following:

1. Credit
2. Capacity
3. Collateral
4. Character

How Lenders Extend Credit

It is very difficult to get a personal loan with no credit and no collateral.

• All lenders want to collect on the loans they fund

Home lenders do not want the house:

• They just want borrowers to make good on their mortgage payments

The best assurance lenders have that they will get their money and have creditworthy borrowers is by reviewing borrower’s prior payment history:

Although prior credit payment history is not a guarantee that borrowers will be good-paying borrowers:

• It is a good reflection on the character of borrowers

Qualification Requirements For Home Loans With No Credit In Florida

Mortgage lenders require a minimum credit score in order for a home buyer to qualify for a mortgage.

• Applying for a home loan with no credit is doable with non-traditional credit tradelines
• If a borrower has a time where the loan officer can help the borrower get credit, that will be the easiest way of going about preparing for home loans with no credit in Florida
• Once there are a few credit tradelines on the borrower’s credit report, the borrower will have a credit score
• They can apply for a mortgage than going about submitting a mortgage file where the borrower has no credit or credit score
• Those who need home loans with no credit may run into hurdles and challenges by other lenders

It will most likely be downgraded to a manual underwrite:

The underwriter will definitely ask for a lot of documents such as the following:

•  verification of rent
• non-traditional credit tradelines
• compensating factors

What Are Non-Traditional Credit Tradelines?

Non-Traditional credit tradelines are creditors that borrowers have a payment agreement with for goods and services that do not report on consumer credit reports.

FHA allows non-traditional credit tradelines to be used in lieu of traditional credit tradelines.

• Traditional credit tradelines are creditors and lenders that do report the borrower’s payment history to credit reporting agencies:
  • Traditional tradelines are reported on consumer’s credit reports

Timely payment in the past 12 months is a must for a borrower to use non-traditional credit tradelines in lieu of a traditional credit tradeline.

Example Of Non-traditional Credit Tradelines

Below are examples of non-traditional credit tradelines that can be used to qualify for an FHA Loan:

• Gas Payments
• Verification Of Rent
• Electric Payments
• Water And Sewer Payments
• Land-Line Telephone
• Cable Television And/Or Satellite Dish
• Auto And/Or Equipment Leases Not Reporting On Credit Report
• Personal Loans
• Insurance Premiums
• Child Care Expenses That Is Paid Monthly For At Least 12 Months
• School Tuition
• Rent-To-Own Stores
• Cell Phone Payments