Mortgages For Borrowers With Under 580 Credit Scores

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Mortgages For Borrowers With Under 580 Credit Scores

This ARTICLE On Mortgages For Borrowers With Under 580 Credit Scores Was PUBLISHED On August 8th, 2019

Mortgages For Borrowers With Under 580 Credit Scores
Gustan Cho Associates

 

Mortgages For Borrowers With Under 580 Credit Scores Mortgage Guidelines:

  • Many clients of Gustan Cho Associates have credit score is well below 580
  • Since we do not have any LENDER OVERLAYS, we are able to help these clients
  • We have many loan options for individuals with troubled credit
  • Just because your credit score is below 580 does not disqualify you from buying a house
  • Even further, just because your credit score is above 580, but that does not guarantee you qualify for a mortgage
  • The lender must verify much more than just your credit score
  • In this blog we will detail how to get a mortgage with credit score is below 580 and what it takes Mortgages For Borrowers With Under 580 Credit Scores get approved for a home loan

In this article, we will cover and discuss qualifying for Mortgages For Borrowers With Under 580 Credit Scores.

As stated above, we have more than one option for our clients with credit score is below 580. Below we will detail a few different loan options we have available.

HUD Mortgage Lending Guidelines

What is are HUD Mortgage Lending Guidelines

FHA Loans And HUD Mortgage Guidelines:

  • The U.S. Department of Housing and Urban Development (HUD) allows Americans to buy a house with credit scores below 580
  • The caveat to these mortgages is they require at least a 10% down payment
  • An FHA borrower with a credit score above 580 is only required to put down 3.5% as a down payment
  • But let’s focus on the credit score is below 580
  • The FHA TOTAL SCORECARD, the automated underwriting system (AUS) for FHA loans does allow automated approvals below 580 or you can manually underwrite the file
  • Since we close and fund so many mortgages with credit score is below 580, we have seen multiple different situations
  • The automated underwriting system seems to loosen up when putting down 10% or more on an FHA mortgage

I have seen automated approvals with late payments in the past 12 months even combined with credit score is below 580. When putting down 10%, the level of risk dramatically decreases for lenders.

Manual Underwriting Guidelines On VA And FHA Loans

What are the Manual Underwriting Guidelines On VA And FHA Loans

Manual underwriting:

  • If for some reason you do not get an automated approval with 10% down, your loan may be downgraded to a manual underwrite
  • There are specific rules put in place for debt to income requirements when you manually underwrite an FHA mortgage
  • Your debt to income is capped at 31% / 43% with credit scores below 580
  • There is no exception, even with COMPENSATING FACTORS

For more on FHA manual underwriting guidelines please see our FHA MANUAL UNDERWRITING BLOG.

Non-Occupant Co-Borrower Mortgage Guidelines:

What are teh Non-Occupant Co-Borrower Mortgage Guidelines:

If you do not qualify by yourself or with your spouse, you may add a non-occupant co-borrower to a mortgage.

  • For an FHA mortgage, you are permitted to add a co-borrower who will not live in the property
  • Hence the term non-occupant co-borrower
  • Their qualifications will be added to the loan file
  • All of their debts and income will count against the overall debt-income ratio of the loan
  • Since they will be on the loan, if they are helping you with the down payment, that will not be considered to give funds
  • When utilizing your own funds, the risk is slightly lower compared to using gift funds
  • The use of your own funds will increase your chances of approval
  • Too many Americans receive incorrect information based on their online research when it comes to mortgage guidelines

We encourage you to call Gustan Cho Associates directly for clarification. You can contact Mike Gracz on 630-659-7644 or send an email to mgracz@gustancho.com.

VA Mortgage Guidelines For VA Home Loans

What are the VA Mortgage Guidelines For VA Home Loans

VA Mortgage Lending Guidelines:

  • We are experts in VA mortgage financing
  • Since we do not have a lender overlays to get in the way for our clients, we do not have a minimum credit score requirement for VA mortgages
  • Most information you read online will tell you to need a 620 credit score to apply for a VA mortgage
  • Keep in mind this is not a guideline, that is an overlay. If your credit score is below 580, please reach out to us for a VA mortgage
  • We have many success stories of qualifying are brave veterans with low credit scores
  • Per HUD guidelines, VA mortgages do not have a minimum qualifying credit score
  • They are more interested in your credit history
  • They want to make sure you have at least a 12-month history of paying all your bills on time

As long as you do not have late payments or any non-medical collections in the past 12 months, more often than not, you qualify for a VA mortgage.

Qualifying For Mortgages For Borrowers With Under 580 Credit Scores With Non-QM Loans

Qualifying For Mortgages For Borrowers With Under 580 Credit Scores With Non-QM Loans

NON-QM Lending Guidelines:

  • The trend of NON-QM mortgages has increased dramatically over the past few years. We have seen an increased need for portfolio lending
  • These loan products are designed for clients who do not fit in your everyday Conventional, FHA, and VA mortgages
  • NON-QM lenders set their own guidelines because they are lending their own money
  • The minimum qualifying credit score for a NON-QM mortgage is usually 500, but we have seen exceptions below that
  • When your credit scores are below 580, you will need a minimum of a 20% down payment
  • Or 80% loan to value for a refinance

NON-QM opens the door to homeownership to thousands of Americans! See our blog on NON-QM MORTGAGE PRODUCTS for more information.

Mortgages For Borrowers With Under 580 Credit Scores Can Qualify At Gustan Cho Associates

Mortgages For Borrowers With Under 580 Credit Scores Can Qualify At Gustan Cho Associates

75% of our clients have either been denied at their current lender or not getting the customer service they need.

  • We are experts in all aspects of mortgage financing
  • We are currently licensed in multiple states and growing rapidly
  • We work with many families for as long as 12 months before they qualify for the home they would like to buy
  • If you do not qualify today, we will create a financial plan to help you qualify as soon as possible
  • If 10% down payment is out of reach, we will work with you to get your credit score is above 580
  • Repairing credit can take time, be leery of credit repair companies promising you the world
  • The credit bureau does not update quickly, so instant gratification is not possible
  • Building credit takes work and time
  • We have seen every credit profile Under the Sun and are here to offer guidance

Please reach out directly to Gustan Cho Associates. Mike Gracz can be reached at 630-659-7644 or email directly on mgracz@gustancho.com, seven days a week!

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