Lenders Requiring Verification Of Rent For Mortgage

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Lenders Requiring Verification Of Rent For Mortgage

This BLOG On Lenders Requiring Verification Of Rent For Mortgage Was UPDATED On November 2nd, 2018

Lenders Requiring Verification Of Rent For Mortgage

Lenders Requiring Verification Of Rent:

Mortgage Loan Applicant applying for a new purchase or refinance mortgage loans, the lender may require mortgage lenders require verification of rent. There are two ways that Verification Of Rent is required:

  1. The Automated Underwriting System (AUS) may require VOR as part of the Automated Findings
  2. Mortgage Lender may require it as an overlay

All manual underwriting requires Verification of Rent (VOR).

Mortgage Process

Mortgage Process

Risk Assessment is what determines a borrower’s loan approval. Mortgage Underwriters need to determine whether the borrower has the ability to re-pay their new mortgage.

  • Lenders will determine whether to approve a borrower for a new mortgage loan by analyzing the borrower’s income, debt, assets, and credit score
  • There are minimum mortgage guidelines on credit score
  • Plus lenders can have their own overlays
  • Lenders have cutoff minimum credit scores as part of their overlays on credit scores
  • Most lenders want a minimum of a 640 credit score
  • Other lenders have lower credit score requirements
  • Cutoff limits are set at 680 FICO, 640, 620, 600, 580, and 530 FICO. 
  • The lower consumer credit scores are, the more mortgage guidelines that will apply
  • Verification of rent can be one of the conditions on AUS
  • There are many instances where AUS will condition VOR for mortgage applicants with credit scores below 620 FICO

When Do Lenders Require VOR?

When Do Lenders Require VOR?

The probability is high that AUS will request VOR for borrowers with credit scores below 620, Verification of rent can be requested by the mortgage underwriter even if not requested by AUS.

  • Verification of rent is proof that the mortgage applicant is currently paying rent and have done so in the past year
  • A rental receipt is not good enough for proving verification of rent
  • Verification of rent, also known as VOR, is proven by supplying a 12 month history of cancelled bank checks and/or 12 months bank statements
  • Renters who are paying cash to landlord and getting a monthly receipt cannot be accepted as proof of verification of rent

Renting From Property Management Company

Renting From Property Management Company

Another option instead of cancelled checks that a verification of rent will be valid is if the landlord is a property management company.

  • A written letter verifying rent for the past year from a property management company will be a valid verification of rent
  • This holds true even though the renter have paid them in cash  
  • For those folks who are intending in buying a new home, make sure to pay monthly rental payments with a check
  • There are enough obstacles to overcome in the mortgage application process and verification of rent is one of them
  • It is a shame to be paying rental payments on time with cash and not getting credit for verification of rent

What Happens If I Cannot Prove Verification Of Rent

What Happens If I Cannot Prove Verification Of Rent

If mortgage lender request verification of rent, it must be provided.

  • They will make exceptions if borrowers do not have verification of rent
  • But there will be certain guidelines and restrictions on the terms of the loan
  • The mortgage process cannot proceed further if borrowers  do not have verification of rent and VOR is requested
  • All manual underwrites require VOR
  • Low payment shock is considered a compensating factor
  • An increase of up to 5% from rent to mortgage payment or $100 whichever is lesser is considered low payment shock and compensating factor

Related> Verification Of Rent Required On Manual Underwrites

Related> Verification Of Rent

Related> VOR: Verification Of Rent

2 Comments
  1. jesus says

    I’m trying to refinance my mortgage, how far back can the go or will underwriting look for rental history

    1. Gustan Cho, NMLS 873293 says

      Six months

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