Alex Carlucci The Mortgage Expert,
Publish On: November 24, 2023
This blog will discuss the mortgage guidelines on late payments in the past 12 months. Borrowers can qualify for home loans with bad credit, prior bankruptcy, foreclosures, and outstanding collections. However, mortgage guidelines on late payments normally require timely payments in the past 12 months.
FHA and non-QM loans are the best mortgage options for borrowers with late payments in the past 12 months.
Furthermore, mortgage guidelines on late payments on manual guidelines normally require timely payments in 24 months. One or two late payments are not a deal killer with lenders with no overlays. Many lenders with overlays have required timely payments in the past 12 months. In the following paragraphs, we will discuss and cover the mortgage guidelines on late payments In the past 12 months.
Mortgage Guidelines on Late Payment for Qualifying for a New Home Loan
Nobody tries to miss a payment, but some circumstances arise where there is no choice. Many Americans are in debt; sometimes, making the house payment is not an option. When this happens, there are ramifications. For the most part, your credit score will take a pretty good whack.
Being late on a mortgage payment is the worst type of late payment in the past 12 months you can have.
It is alright for you to have bad credit, collections, charge-off accounts, late payments, and low credit scores. You do not have to pay outstanding collection and charge-off accounts. However, you need timely payments in the past 12 months. Some people have sold their homes, have made prior late payments on a home mortgage in the past 12 months, and need to purchase a new house.
How Can You Get an AUS Approval With Late Payments In The Past 12 Months
You can get an approve/eligible per automated underwriting system (AUS) with recent late payments, including mortgage late payments on FHA loans. The key is that a larger down payment is required to bypass the recent late payments on FHA loans in the past 12 months.
Except for HUD, VA, USDA, Fannie Mae, and Freddie Mac, algorithms will automatically render refer/eligible or refer with caution findings with recent late payments in the past 12 months.
This holds especially true with late payments on a mortgage debt in the past 12 months. Due to having one or more late payments on a mortgage in the past 12 months, they are not eligible to finance a new home. So, what do you do? Do you need to rent a house until you qualify for a new mortgage loan? The team at Gustan Cho Associates are experts in helping borrowers get a new mortgage with late payments on a mortgage in the past 12 months.
Can I Qualify for a Mortgage with Late Payments in the Past 12 Months?
One late payment is not the end of the world in the eyes of Fannie Mae, Freddie Mac, and HUD. Issues arise when there is more than one late payment on your mortgage or if you require manual underwriting. At Gustan Cho Associates, we’ve seen all sorts of credit profiles. We can help most clients or put them on a path to qualify as soon as possible. One of our borrowers’ largest hurdles is late mortgage payments or rent payments. Late payments will still be an issue even if your rental does not report to the credit bureaus.
Mortgage Guidelines on Late Payments on Conforming Loans
What are the rules for qualifying with mortgage late payments? Conventional loan – Under Fannie Mae mortgage guidelines on late payments on conforming loans, you are allowed one 30-day late payment in the past 12 months. You can have one 30-day late payment on a mortgage payment in the past 12 months and qualify for a home purchase or rate and term refinance conventional loans.
You cannot do a cash-out refinance mortgage on conventional loans if you had one 30-day late payment in the past 12 months.
Any more than one 30-day late payment will result in a “refer with caution” AUS report, Meaning your loan is not eligible to close. If you are 60 days late, you must wait for that late payment to be seasoned 12 FULL months before you are eligible. Please remember that the information above will also apply to Second mortgages, HELOCs, and manufactured home loans.
Get Mortgage On Late Payments On Conforming Loans
Mortgage Guidelines on Late Payments on FHA Loans
FHA Loan – HUD, the FHA parent, can sometimes be more forgiving. We have seen automated AUS approvals with two 30-day late mortgage payments in the past 12 or 24 months. For this to happen, typically, you need a higher credit score and cash reserves available after closing costs. Or even a 10% down payment.
FHA loans are the best mortgage loan program in the nation for borrowers with prior bad credit and recent late payments.
Generally, you are allowed one 30-day late payment, just like conventional loans above. If you go 60 days or later, your loan must be downgraded to manual underwriting. Manual underwrites do not allow any late payments in the past 12 months without proper documentation—no more than two 30-day late payments in the past 24 months on manual underwriting.
Mortgage Guidelines on Late Payments on VA Loans
VA Loan – VA loans stress the past 12 months of your payment history. A rule of thumb is you need to have the past 12 housing payments to be on time. Sometimes, you can downgrade to a manual underwrite with one 30-day late payment in the past 12 months. You cannot have a 60-day or greater, resulting in an automatic “refer/ ineligible” AUS report.
To be eligible for a manual underwrite on VA loans, you need timely payments in the past 24 months on all you monthly debt payments.
You need verification of rent on manual underwriting VA loans. However, Gustan Cho Associates can waive rent verification if you live rent-free with your family. We can also waive the two-year timely payments on manual underwriting. Gustan Cho Associates requires one year of timely payments on manual underwrites.
Is It Possible To Get Approved For a Mortgage With Late Payments
Gustan Cho Associates, empowered by NEXA Mortgage, LLC., are experts helping borrowers get mortgage approval with late payments in the past 12 months. Most government and conventional loan guidelines frown upon borrowers’ late payments in the past 12 months.
The team at Gustan Cho Associates are experts in helping borrowers with low credit scores and late payments get approved for VA loans.
We have helped borrowers with credit scores down to 500 FICO get approved for VA loans. If you have recent late payments in the past 12 months and need to consult with VA financing experts, contact us at Gustan Cho Associates with any VA questions at 262-716-8151. Text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
Mortgage Guidelines on Late Payments on Manual Underwriting
The right-hand rule on manual underwriting is you need timely payments in the past 24 months on FHA manual underwriting files, and you need 12 months of timely payments on VA manual underwriting files. There are ways to underwrite late payments for FHA and VA loans manually.
You must have a documented excuse, such as loss of employment, major illness that required hospitalization, or other documented extenuating circumstances that were above and beyond.
There must be concrete evidence to show that you could not make the mortgage payment on time. Let’s be honest. With today’s technology, you can pay your mortgage from your cell phone. So it is very hard to have a documented excuse for not paying. We are experts in manually underwritten mortgages. So, if you have had late payments, please get in touch with us at Gustan Cho Associates for advice.
Contact For Late Payment On Manual Underwriting
Mortgage Guidelines on Late Payments for Rolling 30-Day Lates
30-day rolling late payments are when you are first late on a monthly debt payment such as a mortgage. The next mortgage payment is due by the time you pay your late mortgage, but you only made the previous month’s mortgage payment. So, you made last month’s mortgage payment and now owe this month’s mortgage payment, which will not be paid until next month. This is what you call a 30-day rolling late payment.
Once you get late with paying your monthly mortgage payment, you will continuously be late on your mortgage payment unless you catch up to the current month due.
If you are late on last month’s mortgage payment and just paid it this month, what will happen to this month’s mortgage payment? This is what you call a rolling 30-day late mortgage payment. Rolling 30-day late payments, especially on mortgage payments, is often confusing to many folks: The guidelines have changed recently, and 30-day rolling late payments are now unfortunately considered separate late payments. If you have rolled multiple 30-day late payments or are currently rolling 30-day late payments, each month you are late will count against you individually.
What Are My Options If I Do Not Meet the Mortgage Guidelines With Late Payments
What are your options with late payments? NON-QM- NON-QM mortgages DO ALLOW for late payments—many late payments, for that matter. A larger down payment will be necessary with more late or longer delinquencies. These loans also allow for rolling 30-day late payments.
You may obtain NON-QM mortgages just one day after major housing events such as foreclosure, short sale, or deed-in-lieu. We are experts in NON-QM lending.
If you feel your late payments will not allow you to get a mortgage, a NON-QM loan will be a good option. For further questions or to review your specific late payment scenario, please call us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. We have seen every type of late payment possible! We are here to help seven days a week!
How To Get Pre-Approved For a Mortgage Loan With Recent Late Payments
Gustan Cho Associates is one of the very few national mortgage companies with no overlays on government and conventional loans. Gustan Cho Associates are also experts in originating non-QM and bank statement loans for self-employed borrowers.
FHA and Non-QM loans are the best mortgage loan options for borrowers needing to qualify for mortgage with recent late payments. With FHA loans, you will need a higher down payment to get an approve/eligible per automated underwriting system.
Non-QM loans require a 20% to 30% down payment for a non-QM loan with recent late payments. The team at Gustan Cho Associates is available seven days a week, on evenings, weekends, and holidays. To start the qualification and pre-approval process, don’t hesitate to contact Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
