This BLOG On HUD Late Payment Guidelines In Past 12 Months On FHA Loans Was PUBLISHED On February 23rd, 2019
The Gustan Cho Team at Loan Cabin Inc. is a direct lender with no overlays on government and conventional loans.
- Over 75% of our borrowers are folks who come to us after they were told they do not qualify by other lenders
- Most lenders have overlays on government and conventional loans
- Lender overlays are additional lending requirements above and beyond FHA, VA, USDA, and Conventional Guidelines
- Lenders require all borrowers to meet agency guidelines
- However, lenders can have their own lending standards that are higher than agency guidelines
- Per HUD Late Payment Guidelines in the past 12 months, borrowers can have late payments in the past 12 months
- It is up to the automated underwriting system to decide whether or not borrowers get an approve/eligible per AUS with late payments in the past 12 months
- AUS will approve borrowers with one or two late payments in the past 12 months
- However, a lender may have overlays that will override the late payment in the past 12 months as part of their lender overlays
- Gustan Cho Associates at Loan Cabin Inc. does not have any overlays on FHA, VA, USDA, and Conventional Loans
We only follow HUD Late Payment Guidelines on FHA Loans.
HUD Late Payment Guidelines Versus Lender Overlays
Many borrowers who contact us at Gustan Cho Associates are told by other lenders they do not qualify for FHA Loans due to having late payments in past 12 months.
- Per HUD Late Payment Guidelines, late payments in the past 12 months is allowed to get AUS Approval
- One or two late payments should not be an issue in getting an automated approval
- Multiple late payments may be a problem
Lenders that automatically disqualify borrowers due to late payments in past 12 months is not because of HUD Late Payment Guidelines but because of their lender overlays.
How Do Mortgage Underwriters View Late Payments In Past 12 Months
FHA Loans is the best loan program for borrowers with bad credit and lower credit scores.
- HUD, the parent of FHA, requires 580 credit scores for borrowers to qualify for a 3.5% down payment home purchase loan
- Borrowers do not have to pay outstanding collections and/or charged off accounts to qualify for FHA Loans
- Borrowers can have bad credit and qualify. However, timely payments in the past 12 months is very important. Per HUD Late Payment Guidelines, but most lenders will not qualify borrowers with recent late payments
Gustan Cho Associates at Loan Cabin Inc. are one of the very few national lenders that will just follow HUD Late Payment Guidelines and have no overlays.
FHA Mortgage Guidelines
FHA has the most lenient mortgage guidelines out of any other loan program:
- HUD is lenient with their mortgage guidelines on credit, credit scores, and debt to income ratio requirements
- 580 credit scores required for 3.5% down payment home purchase loans
- The Department of Housing and Urban Development (HUD) sets the lending guidelines for lenders on FHA Loans
- Home buyers with credit scores lower than 580 down to 500 can qualify for FHA Loans with 10% down payment with an automated underwriting system approval
- Max debt to income ratio to get automated approval is 46.9%/56.9%
- Manual Underwriting requires verification of rent
- 2 year waiting period after Chapter 7 Bankruptcy discharged date
- 3 year waiting period after foreclosure, deed in lieu short sale
- Borrowers in a current Chapter 13 repayment plan can qualify for FHA Loans one year into the plan with trustee approval
- There is no waiting period after Chapter 13 bankruptcy discharge date to qualify for FHA Loans
Best chances to get an approve/eligible per automated underwriting system is to have timely payments in past 12 months. Borrowers with late payments in past 12 months and need a direct lender with no overlays on FHA Loans, please contact us at 262-716-8151 or text us for faster response. Or email us at email@example.com.