Mortgage Lender Overlays

FHA And Fannie Mae Guidelines On Mortgage Lender Overlays

FHA and Fannie Mae has set their own mortgage qualification guidelines where mortgage lenders need to abide by them.  Mandatory guidelines include minimum credit scores, waiting periods after bankruptcy, foreclosures, and short sales, debt to income ratio caps, down payment requirements, collection account guidelines, judgment guidelines, and hundreds of more guidelines.  Just because you get a Fannie Mae Automated Underwriting System approval does not mean a particular lender will approve a mortgage loan application.  Many mortgage lenders will implement their own set of additional mortgage underwriting standards that will surpass the bare minimum FHA and Fannie Mae Guidelines.  For example, a mortgage loan borrower can have an approved/eligible per DU Findings which has been automated underwritten by Fannie Mae’s Automated Underwriting System and say that the mortgage loan applicant has a mid FICO score of 620 and a debt to income ratio of 53%.  The particular mortgage banker might have mortgage lender overlays where the mortgage loan borrower might not qualify because their mortgage lender overlays can be that they require a 640 FICO socre, and they might cap their debt to income ratios to 45% on credit scores under 680 FICO.

Typical Mortgage Lender Overlays

Before you read any further on mortgage lender overlays, there are mortgage lenders with no mortgage lender overlays that I will cover in a later paragraph.  However, I will cover mortgage lender overlays and what to do in the event if you choose a mortgage banker with mortgage lender overlays.  Typical mortgage lender overlays are the following:

1.  Credit scores:  Fannie Mae Automated Underwriting System might approve you with a 622 FICO credit score, however, the mortgage company may require a  minimum of 640 FICO.

2.  Debt to Income Ratios:  Fannie Mae Automated Underwriting System might approve a mortgage loan applicant with a 55% back end debt to income ratio, however, a mortgage company may have their own mortgage lender overlays where they cap the debt to income ratios at 45%.

3.  Verification of rent:  Fannie Mae Automated Underwriting System might approve you per DU Findings and might not require verification of rent, however, the mortgage company might have their own mortgage lender overlays requiring verification of rent.

4.  Paying off past charge offs and collection accounts:  FHA guidelines do not require old collection accounts to be paid off, however, the mortgage lender might have their own mortgage lender overlays requiring that you pay off old collection accounts.

5.  Credit tradelines:  Fannie Mae Automated Underwriting System might approve you per DU Findings if you have one or two established credit tradelines, however, the mortgage lender might have their own internal mortgage lender overlays requiring 3 or more credit tradelines.  Some mortgage lender overlays require 24 months of seasoning of credit tradelines.

No Mortgage Lender Overlays

If you are a mortgage loan borrower with higher debt to income ratios or less than perfect credit, the good news is that I can help you get a mortgage loan approval per DU Findings with no mortgage lender overlays.  I have wholesale mortgage lenders that will just go off by an approved/eligible per DU Findings from Fannie Mae’s Automated Underwriting System’s approval Findings.  If your credit scores are at 600 FICO and you get an approved/ eligible, I will be able to help you secure a residential mortgage loan.  Please call me at 262-716-8151 or visit me at Gustan Cho Associates  at www.gustancho.com .