Qualifying For A Mortgage With Late Payments In The Past 12 Months
This ARTICLE On Qualifying For A Mortgage With Late Payments In The Past 12 Months Was PUBLISHED On October 6th, 2020
We all know that qualifying for a mortgage can be incredibly difficult.
- Many clients of Gustan Cho Associates have less than perfect credit
- The good news is
- We specialize in mortgage lending without additional LENDER OVERLAYS
- There are many instances where we are able to help clients obtain a mortgage even with late payments reporting to the credit bureaus in the past 12 months
- In this blog, we will detail how to qualify for a mortgage with Gustan Cho Associates with less than perfect credit
- We will also discuss the application process to apply for a mortgage with Gustan Cho Associates
In this article, we will discuss and cover Qualifying For A Mortgage With Late Payments In The Past 12 Months.
Qualifying For A Mortgage With Late Payments In The Past 12 Months Is Possible
Late payments are never a good thing and they do severely impact your credit score.
- It is not necessarily a deal-killer but definitely does not help your mortgage qualifications
- If you have late payments in the past 12 months, we will detail how you may still achieve a mortgage
In the following paragraphs, we will discuss qualifying for Conventional, FHA, and VA Loans with late payment rules.
Qualifying For A Mortgage With Late Payments In The Past 12 Months On Conventional Loans
- Conventional loans are not very forgiving with late payments in the past 12 months
- Especially if you are late on your mortgage or a rental payment
- Installment loans (such as an auto loan) seem to have more negative effects compared to missing a payment on a credit card
- If you do have late payments in the past 12 months, you will need an automated AUS approval
- For more on the automated underwriting systems, please see our AUS BLOG
- If you do receive an automated approval with late payments in the past 12 months, you are then eligible to be issued a preapproval letter
If you do not get an automated approval, then you must wait until that late payment is seasoned at least 12 months.
HUD Guidelines On Late Payments In The Past 12 Months
HUD Agency Guidelines On Late Payments In The Past 12 Months On FHA Loans:
- The Federal Housing Administration or FHA is overseen by the U.S. Department of Housing and Urban Development or HUD
- Their guidelines are slightly more forgiving compared to conventional mortgage lending guidelines
- FHA mortgages allow a higher debt to income ratio and are a little more forgiving when it comes to late payments
- If you have late payments in the past 12 months and receive an automated underwriting approval, you are good to go
- With FHA mortgages Gustan Cho Associates do you have the ability to complete a manually underwrite
Manual underwriting does have tighter guidelines but still allows late payments in the past 12 months.
Qualifying For A Mortgage With Late Payments In The Past 12 Months: Installment And Housing Late Payments
Installment And Housing Payments:
- NO late payments allowed in the past 12 months
- No more than 2 x 30 day late payments allowed in the past 13-24 months
- No major derogatory credit on REVOLVING accounts in the past 12 months
Here is where FHA is more flexible:
- You are allowed up to 3 x 60 day late payments OR 1 x 90-day late payment on revolving credit cards
- NO Non-Medical collections in the past 12 months
VA Agency Mortgage Guidelines On Late Payments On VA Loans:
The general rule of thumb for VA mortgage lending is no late payments in the past 12 months.
- This includes non-medical collections showing up in the past 12 months
- However, as a veteran, if you do have late payments in the past 12 months, it is still possible to qualify for a mortgage loan
- You will need a strong letter of explanation as well as supporting documentation as to why you missed a payment
- For instance, if you were in the hospital and unable to make your payment, generally, an underwriter will accept this and look past your late payment
- There is no minimum qualifying credit score for a VA mortgage, so underwriting relies heavily on payment history
- Even with a low credit score, if you have a clean 12 months meeting no late payments or no non-medical collections, you will more than likely qualify for a VA mortgage loan
Note: Raising credit scores and having high reserves may boost your qualifications on all above loan programs, especially if you have late payments reporting to the credit bureaus.
Starting The Mortgage Process At Gustan Cho Associates
Applying for a mortgage with Gustan Cho Associates is a simple process.
- There are only a few steps to know if you qualify or not
- First, you will call Mike Gracz on 630-659-7644 or send an email to firstname.lastname@example.org
- You and Mike will connect and discuss your mortgage goals
- During this initial conversation, it is important to highlight any areas of your credit that you feel are less than perfect
- It is in your best interest to be upfront and honest with your loan officer since you are on the same team
- If for some reason you do not qualify today, your loan officer will put a customized financial plan together to help you qualify for a home as soon as possible
After your initial phone call, a licensed loan officer in your state will send you an application link.
Documents Required To Start The Mortgage Process
After completing the application link, you will need to send in the following documentation.
- Last 60 Days Bank Statements – to source money for the down payment
- Last 30 Days Pay Stubs
- Last Two Years W2’S
- Last Two Years Tax Returns
- Driver’s License
Once your loan officer receives this documentation, they will crunch the numbers and see exactly what you qualify for. Note, just because your debt to income ratio may qualify you to a certain payment, it is important you stay within your monthly budget. Buying a home is exciting but is it important to live within your means.
Shopping For A Home After Getting Qualified And Pre-Approved
After your loan officer has completed your application, you will be issued a preapproval letter or a customized financial plan to qualify for a mortgage in the future.
- Assuming you are preapproved, you will then start shopping for a home
- This is an exciting time and your loan officer will be there to answer any questions you may have
- They will also send you an estimated fee breakdown for homes you are interested in
- Each home will have different property taxes and some homes will have additional association fees
- You will want to know your total monthly housing obligation before viewing a home
And once again, we must stress it’s important to stay within your monthly budget.
Qualifying For A Mortgage With Late Payments In The Past 12 Months With A Lender With No Overlays
Working with Gustan Cho Associates will be a rewarding experience. Our loan officers are educated with all recent mortgage guideline changes. The COVID-19 coronavirus outbreak has changed many guidelines throughout the industry. The good news is, we do not have additional overlays due to COVID-19. We are available seven days a week to answer questions you may have. Homeownership is a possibility for many Americans, even those who have less than perfect credit. We are here to help you every step of the way. We encourage you to call Mike Gracz on 630-659-7644 for more information and how you can become a homeowner.