Mortgage with Recent Derogatory Credit

Mortgage With Recent Derogatory Credit in the Past 12 Months

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will cover and discuss qualifying for a mortgage with recent derogatory credit with our non-QM loan programs. Homebuyers can qualify for a mortgage with recent derogatory credit at Gustan Cho Associates with our non-QM loan program.
What is recent significant derogatory credit? Here are examples of issues when it comes to qualifying for a mortgage with recent derogatory credit for borrowers:

  • Bankruptcy
  • Foreclosure
  • Deed-in-lieu of foreclosure
  • Short-sale
  • Recent late payments
  • Multiple Housing Late Payments

Getting a mortgage with a recent derogatory credit history, especially within the past 12 months, can be challenging but not impossible. In the following paragraphs, we will cover the steps home buyers can take to qualify for a mortgage with recent derogatory credit in the past 12 months.

How Mortgage Lenders View Recent Late Payments

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Overall, while recent late payments can make it more difficult to get approved for a mortgage, taking proactive steps to improve your credit and demonstrate financial responsibility can increase your chances of success. Getting approved for a mortgage with recent late payments can be more challenging, but it’s not impossible. Here are some steps you can take to improve your chances:

Understand Your Credit Report

Review your (Equifax, Experian, and TransUnion) and review it thoroughly. Make sure all information is accurate and up-to-date. If there are any derogatory credit reports on your credit report, be prepared to explain the circumstances surrounding them. Lenders may be more understanding if there are extenuating circumstances beyond your control, such as medical emergencies or job loss.

Work on Improving Your Credit

mprove your credit score by reducing debt and disputing any inaccuracies on your credit report. Small improvements in your credit score can significantly affect getting approved for a mortgage. A large down payment can offset a lower credit score. This may make you a more attractive borrower to lenders.

Consider Government Programs

Look into government-backed mortgage programs such as FHA or VA loans, which may be more lenient with credit requirements than conventional loans. However, keep in mind that these programs may have other eligibility criteria.

Shop Around for Lenders

Not all lenders have the same credit requirements, so shop around and compare offers from several lenders. Some lenders specialize in working with borrowers with recent late payments, bad credit, and low credit scores. Consider getting a co-signer with strong credit to help you qualify for a mortgage. The co-signer will be equally responsible for repaying the loan.

When applying for a mortgage, be honest and transparent with lenders about your credit history. Trying to hide derogatory credit marks or misrepresenting your financial situation could harm your chances of getting approved for a loan.

Remember that every lender has its underwriting criteria, so what may be acceptable to one lender may not be to another. Be patient and persistent in your search for a mortgage, and don’t hesitate to seek guidance from a financial advisor or mortgage broker if needed.

How Can Borrowers Qualify For Mortgage With Recent Derogatory Credit

Many borrowers are aware that government and conventional loans require a mandatory waiting period after housing events or bankruptcy. The waiting period after Chapter 7 Bankruptcy is a two-year waiting period after Chapter 7 Bankruptcy on VA and FHA loans. Borrowers can qualify for FHA and VA loans one year into Chapter 13 Bankruptcy repayment epriod with Trustee approval. There is a three years waiting period after Chapter 7 Bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale on USDA loans. There is no waiting period after the Chapter 13 Bankruptcy discharged date on VA or FHA loans. There is a two-year waiting period to qualify for VA loans after the housing event. There is a four-year waiting period after Chapter 7 to qualify for conventional loans. Fannie Mae and Freddie Mac require a two year waiting period after Chapter 13 discharge date. There is a four year waiting period after the Chapter 13 dismissal date on conventional loans. . There is a four year wait period after a deed-in-lieu or short sale on conventional loans. There is a seven-year wait period after foreclosure.

Non-QM Loans One Day After Bankruptcy and Foreclosure

The great news is there is no waiting period after housing events or bankruptcy on non-QM loans. Gustan Cho Associates offers non-QM mortgages one day out of bankruptcy and foreclosure with a 30% down payment. As the bankruptcy or the housing event ages, the down payment requirement is less than 30% percent. If the borrower has one year seasoning after bankruptcy or a housing event, the down payment can be 20% or 80% loan-to-value.

NON-QM Mortgage With Recent Derogatory Credit

NON-QM loans are portfolio loans offered by Gustan Cho Associates. NON-QM loans are not hard money loans. Many borrowers often think non-QM loans are hard money loans and do not even have an open mind. NON-QM loans are not just for borrowers with bad credit. Many homebuyers with great credit often benefit from non-QM loans versus traditional mortgages.

Benefits of NON-QM Mortgages Versus Traditional Financing

Benefits Of NON-QM Mortgages Versus Traditional FinancingHere are case scenarios where home buyers benefit from non-QM mortgages versus traditional financing:
Bank statement loans for self-employed borrowers:

10% to 20% down payment: Down payment requirements are dependent on borrowers credit scores. Mortgage Rates depend on down payments and down payments by borrowers.

Mortgage Loan Approval During Rising Home Prices

Home values have been increasing nationwide despite rising interest rates. There does not seem to be any signs of a housing market correction. Both the FHFA and HUD have been increasing loan limits for the past three years due to rising housing prices. Many folks can afford a home but can not qualify for a mortgage due to not meeting the mandatory wait period after a housing event or bankruptcy. As time passes, housing prices may increase more where buyers can no longer afford homes. With our non-QM mortgages, homebuyers no longer need to meet the mandatory waiting period on government or conventional loans.

Mortgage With Recent Significant Derogatory Credit Lending Guidelines

NON-QM loans require a 5% to 20% down payment. The down payment requirement depends on borrowers’ credit scores. For example, Gustan Cho Associates offers 10% down payment full doc non-QM jumbo loans. However, 720 credit scores are required. For borrowers with 680 credit scores, a 15% down payment is required. For those with 660 FICO, a 20% down payment is required. Under 660, a 25% down payment is required. For borrowers with 500 credit scores, a 30% down payment is required. Reserves are required. The amount of reserves depends on borrowers’ credit and income profile.

Debt-to-Income Ratio Caps on Non-QM Loans

Debt-to-income ratios can be up to 50% DTI with compensating factors. Mortgage Rates depend on the combination of borrowers’ credit scores or down payments. No maximum loan limits. No private mortgage insurance is required. Please contact us at Gustan Cho Associates for more information. We can help borrowers with lower credit scores boost their scores to qualify and get them the best rates possible.

Importance of Rental Verification and Payment Shock

Mortgage Underwriters will be concerned about borrowers’ rental payment history which is called verification of rent and payment shock. For example, if a borrower is paying $2,000 per month on rent and their new PITI on their new mortgage payment is $2,000 per month, there is zero payment shock. If the renter is paying $2,000 per month rent and the new mortgage payment is $2,200, there is an increase of $200 in new housing payment or a 10% payment shock. Rental verification is required on a mortgage with recent significant derogatory credit.

Mortgage Broker Licensed in 48 States With Access To 220 Wholesale Lenders

Gustan Cho Associates is a mortgage company licensed in 48 states with over 160 wholesale mortgage lending partners and with no overlays on government and conventional loans. We also offer various non-QM loan programs. Contact us at Gustan Cho Associates at 800-900-8569 or text for a faster response. Or email us at The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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