Mortgage loan programs with no overlays

Mortgage Loan Programs With No Overlays and 30-Day Closing

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss mortgage loan programs with no overlays and closing in 30 days. The majority of mortgage lenders have their own overlays. There are not too many lenders who have Mortgage Loan Programs With No Overlays.

Lender overlays are additional mortgage guidelines imposed by lenders that are above and beyond the minimum agency guidelines of FHA, VA, USDA, Fannie Mae, and Freddie Mac.

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What Are Lender Overlays on Government and Conventional Loans

Lenders can impose lender overlays on just about anything. For example, HUD, the parent of FHA, requires a 580 credit score for a 3.5% down payment FHA loan. Many lenders will require a 620 or 640 credit score for borrowers even though HUD Agency Guidelines only require a 580 credit score.

There are so many lender overlays one lender may have but not another lender. Just because a borrower cannot qualify for a mortgage at one lender does not mean they cannot qualify for a mortgage at another lender.

Mortgage Loan Programs With No Overlays and 30-Day Closing

Finding A Lender With Mortgage Loan Programs With No Overlays

Gustan Cho Associates has no lender overlays on government and conventional loans. Each lender can have its own lender overlays. One lender may have lender overlays on credit scores but not a debt-to-income ratio and a different lender can have overlays on DTI but not credit scores. There are a few lenders that claim they have zero overlays.

Why Do Mortgage Lenders Have Overlays?

However, completely zero overlays are non-existent. Here is a complete list I have of overlays that lenders who claim they have zero overlays still question.

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Mortgage Loan Programs With No Overlays on FHA, VA, USDA, or Conventional Loans

DU approval must reflect a maximum debt-to-income ratio, DTI,  of 56.9% back end and 46.9% front end DTI for borrowers to get an approve/eligible per AUS on FHA loans. Exceptions to exceed the maximum debt-to-income ratio of 46.9% front end and 56.9% back end is not allowed.

Automated Findings of the AUS

The automated underwriting system (AUS)  can approve maximum debt-to-income ratios of up to 46.9% front end and 56.9% back end on FHA loans. Lenders with no lender overlay just go off the automated underwriting system findings and have no other overlays. However, lenders with lender overlay may cap debt-to-income ratios on both front-end and back-end debt-to-income ratios. Mortgage underwriters may request a letter of explanation on how they intend on paying their mortgage and monthly payments with no hardship.

The Borrower’s Ability to Repay

Mortgage underwriters will analyze and be concerned with the borrower’s ability to repay their new housing payment. The submission package must provide evidence of documented strengths to offset any borrowers’ deficiencies (This helps me give me ammo to potentially get around any hurdles).

Low payment shock is considered a great compensating factor. For example, if the borrower’s new housing payment is the same as the rent payments they have been paying, there is a zero percent payment shock.

Low Payment Shock As Compensating Factor

Any payment shock of 5% or under is considered a strong compensating factor. This is because the borrower is used to paying a monthly housing payment and the new mortgage payment will be no payment shock.

Verification of rent by providing 12 months of canceled checks or management VOR.

Manual Underwriting on FHA and VA Loans

Manual Underwriting On FHA And VA Loans

FHA and VA loans are the only two mortgage loan programs that allow manual underwriting. In general, verification of rent is required on all manual underwriting. However, at Gustan Cho Associates rental verification can be waived if the borrower is living rent-free with family members. The owner of the property needs to sign a form that is provided by the lender stating the borrower is living rent-free temporarily to save funds to purchase a home.

Mortgage underwriters can downgrade an automated underwriting system-approved borrower to a manual underwrite because they see many-layered risks. This is the underwriter’s discretion. Lenders with no lender overlays will not downgrade an automated underwriting system borrower to a manual underwrite.

Gustan Cho Associates Are Experts on Manual Underwriting

Living Rent-Free With Family Members

If the borrower has lived with a family member rent-free or paid cash for rent, the borrower is to provide a signed budget letter (I have had some success when documenting less than 12 months on this provided we have a strong LOE’s budget letter, etc). Follow DU for acceptable credit documentation. Collections/Charge-offs less than 24 months and greater than $5000 will be reviewed on a case-by-case basis and the requirement for payoff is at the underwriter’s discretion with lenders who have overlays.

Adding Non-Occupant Co-Borrowers 

Non-occupant co-borrowers or co-signers are permitted as long as they are immediate family members; proof of relationship is required. Other blood relatives (aunts, uncles, cousins, etc) will be permitted and the occupant borrower DTI cannot exceed 50%. Borrower income derived solely from commissions must have 3 months of PITI reserves over and above the required investment.

Borrowers that are currently in a payment arrangement with IRS have an established payment arrangement in place for 3 months and provide evidence of payments made.

Over 75% of Our Borrowers Are Folks Who Could Not Qualify at Other Lenders

Do All Mortgage Lenders Have Different Lending Requirements?

The answer to do all mortgage lenders have different lending requirements on the same loan program is YES. Not all mortgage lenders have the same lending requirements for government and conventional loans. There are many mortgage lenders that change their overlays mortgage loan program guidelines with little notice.

I know of lenders who stated that they had no overlays and that as long as the borrower had approve/eligible from Fannie Mae’s Automated Underwriting System, the deal will get done. However, during the underwriting process, the mortgage application got suspended.

Why Do Loans Get Suspended or Denied During the Mortgage Process?

Home loans often get suspended during the mortgage process because the lender implemented rental verification overlays. Verification of rent is not required on AUS-approved borrowers but a lender can require it even though it is not conditioned on the Automated Underwriting System Findings.

There are times when borrowers can not provide rental verification because the home they were currently living in is under foreclosure. The home can be under the wife’s name and not the husband’s. Ultimately, the underwriting department can approve the mortgage loan without requiring rental verification or giving a pass to their lender overlays.

What Is a Clear To Close?

Mortgage Loan Programs Change

If the mortgage loan originator offers special mortgage loan programs with no overlays where benefits such as not having to pay off open collections, 580 credit scores, and high debt-to-income ratios, I strongly recommend that borrowers aggressively work in getting a clear to close and not procrastinate in submitting required documents.

Gustan Cho Associates has mortgage loan programs with no overlays. We just go off AUS Findings. Gustan Cho Associates are experts in originating and funding non-QM loans such as bank statement loans, asset-depletion mortgages, one-day out of bankruptcy and foreclosure, non-QM jumbo loans with lower credit scores, and a variety of loans for real estate investors.

What Are The Different Types of Mortgage Loans?

In the following paragraphs, we will discuss and cover no mortgage lender overlays approvals on FHA and VA loans. The team at Gustan Cho Associates is a mortgage company licensed in multiple states with no mortgage lender overlays on government and conventional loans. We are licensed to originate FHA, VA, USDA, and conventional residential mortgage loans. Our team at Gustan Cho Associates works with dozens of realtor referral partners nationwide.

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Best Types of Lenders With No Overlays and Lenient Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states with no overlays on government and conventional loans and has the ability to broker non-QM and specialty mortgage loans. Gustan Cho Associates gets daily inquiries from realtors throughout the country about the specialty products we have to offer their home buyers. Many realtors have requested that I write a blog about the mortgage loan program loan programs we have available and the services

Gustan Cho Associates provides. In this article, we will discuss and cover the personal service Gustan Cho Associates can offer with the various mortgage programs we have to offer. We have a national reputation for being able to do loans other mortgage companies cannot do.

We Are The Best Lender For Bad Credit

Best Mortgage Broker With Mortgage Loan Programs With No Overlays

Gustan Cho Associates has No Mortgage Lender Overlays on government and conventional loans. We are available 7 days a week. Gustan Cho Associates is a lender licensed in multiple states. Borrowers can apply online 24/7  at All of our mortgage pre-approvals are full loan commitments issued by our mortgage underwriters. 

The team at Gustan Cho Associates only go off the automated findings of the Automated Underwriting System. We have no lender overlays. Over 75% of our borrowers are folks who either get denied by other lenders or are stressed during their mortgage process with a current lender. Most of our borrowers close their home loans in 30 days or less.

Mortgage Loan Programs With No Overlays on FHA Loans

Gustan Cho Associates has mortgage loan programs with no overlays on FHA loans. Borrowers can qualify for an FHA loan with credit scores down to 500 FICO. To qualify for a 3.5% down payment home purchase FHA loan, the borrower needs a 580 credit score. Borrowers with under 580 credit scores require to approve/eligible per Automated Underwriting System and a 10% down payment.

Manual underwriting is available for borrowers who meet manual underwriting agency guidelines. Debt to income ratios up to 46.9% front-end and 56.9% back-end. Non-occupied co-borrowers are allowed on FHA loans. Up to 6% seller’s concession allowed on FHA loans to cover buyer’s closing costs and escrows. Open collections, late payments, bank overdrafts, and charged-off accounts are allowed.

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Can I Qualify For an FHA Loan With Judgments?

Borrowers with judgments and tax liens are eligible to qualify for FHA loans if they have a written payment agreement and have made three timely payments. Borrowers who have prior bad credit are allowed as long as the borrower has been timely on all of their payments for the past 12 months. Collections and charged-off accounts do not have to be repaid.

Homebuyers can qualify for FHA loans after meeting the two-year waiting period after the Chapter 7 Bankruptcy discharge date. Homebuyers can qualify for an FHA loan after a housing event. There year waiting period after Foreclosure, Deed in Lieu of Foreclosure, and Short Sales.

Can I Qualify For Mortgage After Bankruptcy and Foreclosure?

To qualify for government and conventional loans, borrowers need to meet the agency guidelines of Fannie Mae and Freddie Mac lending on waiting period requirements. There are mortgage loan programs one day out of bankruptcy and foreclosure. There is no waiting period after bankruptcy and foreclosure on non-QM loans. Mortgage borrowers can qualify with our new NON-QM Loan Program. No Waiting Period out of housing events with non-QM loans one day out of bankruptcy and foreclosure.

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HUD Guidelines on FHA Loans During and After Chapter 13 Bankruptcy

Manual underwrites are available for borrowers in an active Chapter 13 Bankruptcy repayment plan with trustee approval

  • No waiting period after the Chapter 13 Bankruptcy discharge date
  • 100% gifts allowed on a home purchase by a family member
  • 24-hour mortgage loan underwrites and mortgage approvals
  • Closings in 14 days if it is a rush file
  • Most closings are in 30 days or less
  • No waiting period for borrowers with a short sale
  • This holds true as long as they were current on their loan until the day of the short sale and evidenced by HUD

Mortgage Loan Programs With No Overlays on VA Loans

VA does not have a minimum credit score or debt-to-income ratio requirement. However, to get approve/eligible per AUS, Veteran borrowers should have at least a 580 credit score and a debt-to-income ratio under 60% DTI. However, VA does not require a minimum credit score requirement.

Residual Income and Reserves are great compensating factors for VA Loans for Veteran Borrowers with less-than-perfect credit and higher debt-to-income ratios. Outstanding Collections and Charge Offs do not have to be paid to qualify for VA loans at Gustan Cho Associates.

Can I Qualify For a Mortgage During and After Chapter 13 Bankruptcy

FHA And VA Loans During And After Chapter 13 Bankruptcy With No Mortgage Lender Overlays

Both FHA and VA borrowers can qualify for home loans during a Chapter 13 Bankruptcy Repayment Plan. Here are both FHA and VA Guidelines for qualifying for a mortgage during the Chapter 13 Bankruptcy Repayment Period:

  • To be eligible for FHA and VA loans during Chapter 13 Bankruptcy Repayment Plan, the borrower needs to have been in a repayment plan for at least 12 months
  • Get the approval of the Chapter 13 Bankruptcy Trustee which is normally never a problem
  • Manual Underwriting so manual underwriting guidelines apply
  • Verification Of Rent: Timely rent payments in the past 12 months
  • Maximum debt-to-income ratio not to exceed 50% DTI

FHA And VA Loans After Chapter 13 Bankruptcy

Most FHA And VA lenders require a one-year to two-year waiting period after a Chapter 13 Bankruptcy discharge for them to qualify for FHA And VA Loans. Gustan Cho Associates does not have any waiting period requirement after a Chapter 13 Bankruptcy discharge date. Home Buyers can qualify for FHA and VA Loans during and after Chapter 13 Bankruptcy with no waiting period requirements.

Any mortgage loan underwriting with less than 2 years of seasoning after a Chapter 13 Bankruptcy discharge is done via manual underwriting. We close all manual underwrites in 30 days or less.

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What Are NON-QM Loans and Bank Statement Mortgage Loans

HUD has discontinued the FHA Back to Work Extenuating Circumstance due to an economic event mortgage programBorrowers who have had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale used to be able to qualify after one year of a Chapter 7 Bankruptcy or Housing Event.

The Ill-Fated Back-to-Work Mortgage

The waiting period was shortened to a one-year waiting period after Chapter 7 and/or housing event as long as the cause of the Chapter 7 Bankruptcy, Foreclosure, Deed In Lieu Of Foreclosure, and/or Short Sale was caused by the borrower being unemployed, or underemployed.

The unemployment needed to have affected the borrower’s household income by at least 20% for at least six months prior to their initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.

This program turned out to be a total flop. The Back to Work mortgage program no longer exists. Borrowers who have recovered from bankruptcy and/or foreclosure can now qualify for a non-QM loan one day out of bankruptcy and foreclosure with a 30% down payment.

NON-QM Loans With No Waiting Period After Bankruptcy and Housing Event

NON-QM Loans With No Waiting Period After Bankruptcy And Housing Event

Gustan Cho Associates now has NON-QM loans in lieu of the FHA Back To Work Mortgage which has no waiting period after the following:

  • Foreclosure
  • Deed In Lieu of Foreclosure
  • Short Sale
  • There is a one-year waiting period after a Chapter 7 Bankruptcy discharge date
  • 10% to 30% down payment
  • Down Payment depends on the borrower’s credit score

Bank Statement Loans For Self-Employed Borrowers

Besides having a national reputation for our mortgage loan programs with no overlays, Gustan Cho Associates have a network of over 180 wholesale lending partners. One of our most popular mortgage loan programs with no overlays is our Bank Statement Mortgage Loan program for self-employed borrowers. Income is the average of 12 months of business and/or personal bank statements.

Only deposits are counted and withdrawals do not matter. If business bank statements are used, 50% of the deposits are averaged over 24 months. If personal bank statements are used, then 100% of the deposits are averaged. No overdrafts in the past 24 months. No income tax returns are required. Up to 50% debt-to-income ratios.

Home Buyers looking to get qualified with a mortgage company with hundreds of mortgage loan programs with no overlays, please contact Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at We are available 7 days a week, on evenings, weekends, and holidays.

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This BLOG on Mortgage Loan Programs With No Overlays Was UPDATED On November 10th, 2022