Home Purchase With Bad Credit With Lender With No Overlays

Home Purchase With Bad Credit With Lender With No Overlays

This BLOG On Home Purchase With Bad Credit With Lender With No Overlays Was UPDATED On January 27th, 2018

There are still thousands of potential home buyers who believe that they do not qualify for a home purchase with bad credit.

  • There are periods of every hard working American’s lives where they go through periods of unemployment, underemployment, sickness, divorce, business loss, or other economic event where they suffer a substantial reduction of their household income where their credit scores suffer
  • The good news is that as long as you have income to be able to afford that new home and have re-established credit, you can qualify for a home purchase with bad credit even if you have had a prior bankruptcy, foreclosure, or still have open unsettled credit and collection accounts

Home Purchase With Bad Credit And Low Credit Scores

Conventional mortgage loan programs have higher credit standards than FHA insured mortgage loans.

  • Most conventional mortgage lenders require a credit score of a minimum of 620 FICO credit score
  • However, borrowers with credit scores between 500 and 579 can qualify for a FHA insured mortgage loan with a 10% down payment
  • Home Buyers who want to qualify for a home purchase with bad credit and only want to put a 3.5% down payment, credit scores need to be a minimum of a 580 

FHA Loans Are Best For Home Purchase With Bad Credit

FHA insured mortgage loans are the best mortgage program for a home purchase with bad credit.

  • The Federal Housing Administration’s mission is to make home ownership affordable to all hard working American families
  • FHA is very understanding with prior bad credit issues for home buyers
  • There are certain mandatory waiting period requirements for those who had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • But anyone with a full time job or income can qualify for a home purchase with bad credit
  • Borrowers can have unpaid unsettle collection accounts, charge offs, and previous late payments and qualify for FHA Loans
  • However, FHA insured mortgage lenders want to see timely payments for the past 12 months
  • Re-established credit after a period of bad credit is required to get an approve/eligible per Automated Underwriting System Approval

How Underwriters View Credit And Scores When Underwriting Home Purchase With Bad Credit

As mentioned earlier, home buyers can qualify for a home purchase with bad credit but under certain conditions.

  • Buyers can qualify for a home purchase with bad credit
  • As long as they had a period of a few years of bad credit and has re-established credit and no late payments the past 12 months
  • What lenders want to see is if borrowers had good credit and due to extenuating circumstances had period of bad credit and are showing attempt of re-establishing their credit
  • For example, here is a case scenario:
    • Consumer has a ten year credit history
    • The first six or so years had great credit
    • Then on years of 7 and 8 credit tanked
    • But on year 9 and 10 consumer had no more late payments and have re-established credit
    • This consumer got their credit re-established by getting a few secured credit cards
    • They have been timely on them
    • This will be a perfect ideal candidate for new mortgage
  • Mortgage lenders understand that people can go through periods of bad credit due to financial extenuating circumstances
  • However, if a mortgage applicant has good income and had a period of blatantly being late on paying their bills for the past ten years and even has current recent late payments, there is no mortgage lender that will approve them for any loans
  • Not only is current credit score important, but credit and payment history is equally if not more important

Qualifying For Home Purchase With Bad Credit With Direct Lender With No Overlays

Borrowers who are ready to qualify for home purchase with bad credit with a direct lender with no mortgage lender overlays on government and conventional loans can contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

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