Steps In Getting Mortgage Approval With Bad Credit Illinois

This ARTICLE On Steps In Getting Mortgage Approval With Bad Credit Illinois Was UPDATED On December 11th, 2018

What are the steps to get a Bad Credit Illinois mortgage approval

There are Steps In Getting Mortgage Approval.

  • It starts with consulting with a loan officer
  • Mortgage Loan Applicants first few Steps In Getting Mortgage Approval starts with consulting with a loan officer
  • Borrowers need to complete a 4-page mortgage loan application, called 1003
  • They need to provide documents such as two years tax returns, two years W2s, and 30 days paycheck stubs

Gustan Cho Associates offers W2 Income Only Mortgages where no income tax returns are required. In this article, we will cover and discuss Steps In Getting Mortgage Approval With Bad Credit Illinois.

Steps In Getting Mortgage Approval With Bad Credit

Even home buyers with very bad credit can qualify for a mortgage loan.

  • Homebuyers can qualify for a mortgage after bankruptcy, foreclosure, collections, and prior bad credit
  • Borrowers with recent late payments may need to wait until they have timely payments for the past 12 months before they can qualify for a mortgage
  • There are times where borrowers can qualify for a mortgage loan with some quick credit fixes
  • Basic credit repair may be as simple as paying down credit card balances or adding a new credit

Higher credit scores yield favorable mortgage rates and terms.

Steps In Getting Mortgage Approval With Prior Bankruptcy And Foreclosure

For those folks who have bankruptcies and/or foreclosures, there are federally mandated waiting periods before they will be eligible to qualify for a mortgage loan.

  • There is a two year waiting period after Chapter 7 Bankruptcy discharged date to qualify for FHA and VA Loans
    • USDA Loans require three years
  • Waiting periods to qualify for FHA, USDA Loans after foreclosure, deed in lieu of foreclosure, a short sale is three years
  • There is a two-year waiting period to qualify for VA Loans after a deed in lieu of foreclosure, foreclosure, and short sale

The waiting period start clock after a deed in lieu of foreclosure and/or foreclosure starts from the date of the sheriff’s sale:

  • Or the date the deed was transferred out of the homeowner’s name into the bank’s name

NON-QM And Bank Statement Loans

What are loans for accounts other than QM and bank statements

There is no waiting period to qualify for a mortgage after bankruptcy, foreclosure, deed in lieu, short sale with NON-QM Loans:

  • NON-QM Loans require 10% to 20% down payment
  • Bank Statement Loans for self-employed borrowers are back
  • Banks Statement Mortgage Loans are for self-employed borrowers do not require income tax returns
  • No tax returns are needed to qualify
  • Bank Deposits are averaged over the past 24 months and that is what is used as income
  • Up to 50% debt to income ratios
  • No loan limits on non-qm loans

No private mortgage insurance required on non-QM loans.

Mortgage Loan Program Requirements

The minimum credit score of 500 FICO to qualify for FHA Loans:

  • For those with credit scores between 500 and 580, 10% down payment is required on FHA Loans 
  • 3.5% down payment for home buyers who have credit scores higher than 580 on FHA Loans

Open collections and charge off accounts are okay without needing to pay the outstanding balance with FHA and VA Loans:

  • This holds true as long as AUS renders an approve/eligible
  • VA Loans does not have minimum credit score requirements
  • There is no debt to income ratio cap on VA Loans

Chapter 13 Bankruptcy Mortgage Guidelines

Mandatory 1 year waiting period for those home buyers who have filed Chapter 13 bankruptcy and are in good standing to qualify for FHA and VA Loans:

  • No Waiting Period Requirements after Chapter 13 Bankruptcy discharged date on FHA and VA Loans
  • 2 Year Waiting Period requirement after Chapter 13 Bankruptcy discharged date to qualify on Conventional Loans
  • Debt to income ratio can be as high as 46.9% front end and 56.9% back end DTI on FHA Loans
  • 4 year waiting period for home buyers who had a prior short sale or a deed in lieu of foreclosure on a 5% down payment conventional loan
  • 7 Year Waiting Period after foreclosure to qualify for conventional loans

Employment Gaps Mortgage Guidelines

What do the employment gaps mean?

Gaps in employment allowed:

  • Borrowers can be laid off up to 6 months and still qualify for a mortgage loan
  • Borrowers who have been unemployed for more than six months, there is a six month waiting period before being eligible to qualify for a mortgage loan

Steps In Getting Mortgage Approval With Judgments And Tax Liens

Judgments okay if a payment plan has been in effect for 3 months or judgment has been paid off:

  • Judgments can be paid off prior to closing
  • Tax liens are okay if the borrower has entered into a payment agreement with the IRS
  • 80/10/10 mortgage Piggy-Back mortgage loan programs available to avoid paying the mortgage insurance premium
  • 10% down payment, 10% second mortgage, 80% first mortgage
  • 5% down payment on jumbo mortgages
  • Jumbo Loans and super jumbo loans up to $5 million via hedge fund financing
  • Over $5 million dollar homes are evaluated on a case by case scenario
  • Condo Hotel mortgage loans nationwide
  • Commercial mortgage loans nationwide

Borrowers who have been rejected for a mortgage loan at a bank or another mortgage banker/broker due to their overlays, please contact us at  262-716-8151 or text us for faster response. Or email us at [email protected]

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