HUD Late Payment Guidelines In Past 12 Months On FHA Loans

This Article Is About HUD Late Payment Guidelines In Past 12 Months On FHA Loans

Gustan Cho Associates is a mortgage lender licensed in multiple states 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 does not have any overlays on FHA, VA, USDA, and Conventional Loans. We only follow HUD Late Payment Guidelines on FHA Loans. In this article, we will discuss and cover The HUD Late Payment Guidelines In the Past 12 Months 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 the past 12 months. Per HUD Late Payment Guidelines, late payments in the past 12 months are allowed to get AUS Approval. One or two late payments should not be an issue in getting automated approval. Multiple late payments may be a problem. Lenders that automatically disqualify borrowers due to late payments in the past 12 months are not because of HUD Late Payment Guidelines but because of their lender overlays.

FHA and VA loans are the only two loan programs that allow manual underwriting. Manual underwriting guidelines require borrowers to have been timely in the past 24 months. That means all of the monthly payments need to have been paid on time. Borrowers can qualify for an FHA and/or VA loan during the Chapter 13 Bankruptcy repayment plan after one year into the repayment plan. Chapter 13 Bankruptcy does not have to get discharged to qualify. However, mortgage underwriting during Chapter 13 Bankruptcy repayment plans are all manual underwrites. This is why it is important you pay your monthly bills on time and monitor your credit report.

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 for an FHA loan. However, timely payments in the past 12 months are very important. Per HUD Late Payment Guidelines, but most lenders will not qualify borrowers with recent late payments. Gustan Cho Associates is one of the very few national mortgage companies that will just follow HUD Late Payment Guidelines and have no lender overlays. 

FHA Mortgage Guidelines 

What is FHA mortgage

FHA has the most lenient mortgage guidelines out of any other loan program. HUD is lenient with its 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.

Homebuyers with credit scores lower than 580 down to 500 can qualify for FHA Loans with a 10% down payment with an automated underwriting system approval. The maximum debt to income ratio to get automated approval per the automated underwriting system is 46.9%/56.9%. Manual Underwriting requires verification of rent. There is a 2 year waiting period after the Chapter 7 Bankruptcy discharged date. Borrowers need to meet the mandatory 3 year waiting period after foreclosure, deed in lieu, or 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 the Chapter 13 bankruptcy discharge date to qualify for FHA Loans. For borrowers who need an AUS approval, the best chance to get an approve/eligible per automated underwriting system is to have timely payments in the past 12 months.

Borrowers with late payments in the past 12 months and need a mortgage company licensed in multiple states with no lender overlays on FHA Loans, please contact us at Gustan Cho Associates at 262-716-8151. Or text us for a faster response. Or email us at [email protected]  The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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