NO CREDIT SCORE FHA MORTGAGE LENDERS-Getting a FHA mortgage with no credit score or a short credit history can be frustrating. The Catch-22 for most FHA mortgage applicants with no credit score is that they usually cannot get a FHA mortgage no credit history, and you cannot get a credit history without credit score. Many would be home buyers do not know that the lack of credit history is not enough to keep you from getting a FHA mortgage. It takes a little more work to get approved for a FHA mortgage with no credit score is easier than getting a bad credit FHA mortgage. For FHA mortgage applicants with no credit history that can prove timely payments on typical rental housing expenses under certain terms can qualify for a no credit score FHA mortgage.
FHA MORTGAGE APPLICANTS OFTEN ASK? “ Can I qualify for an FHA Mortgage with No Credit history?” Lack of traditional credit or traditional payment history on a credit report may not be used as the sole basis for rejecting the FHA mortgage approval. For Borrowers without a credit score, the lender must obtain a Non-Traditional Mortgage Credit Report (NTMCR) from a credit reporting company or independently develop the Borrower’s credit history.
NO CREDIT FHA MORTGAGE LENDERS APPROVALS WITH MINIMAL DOWN PAYMENT AND CLOSING FEES:
- Down payment only 3.5% of the purchase price.
- Gifts from family or FHA Grants for down payment assistance and closing costs OK!
- Sellers can credit the buyer’s up to 6% of sales price towards buyers costs and pre-paid.
- No reserves or future payments in account required.
- FHA regulated closing costs.
- Read more about buying a home with an FHA mortgage Bad Credit –No Credit – Investment –Second Home –Multi Family –
NO CREDIT FHA MORTGAGE LENDERS MAKE QUALIFYING EASIER BECAUSE YOU CAN PURCHASE:
- 12 months after a chapter 13 Bankruptcy FHA mortgage Lender approvals!
- 24 months after a chapter 7 Bankruptcy FHA mortgage Lender approvals!
- 3 years after a Foreclosure FHA mortgage Lender approvals!
- No Credit Score FHA mortgage Lender approvals!
- 580 required for 96.5% financing or 3.5% down payment FHA mortgage Lender approvals.
- 500 required for 90% financing or 10% down payment FHA mortgage Lender approvals.
- Bad Credit with minimum 500 FICO credit score with 10% Down Payment FHA. For FHA mortgage applicants with credit scores between 500 and 579 must make down payments of at least 10% down!
- Read more about FHA Qualifying Qualification Summary – Manual Underwrite – Collections-Judgement’s – Bankruptcy or Foreclosure – Compensating Factors –
NO CREDIT FHA MORTGAGE LENDERS ALLOW HIGHER DEBT TO INCOME & EASIER JOB QUALIFYING
- FHA allows higher debt ratio’s than any conventional mortgage loan programs.
- Less than two years on the same job is OK!
- Self-employed buyers can also qualify with FHA Mortgage Lenders.
- Read More about Gifts For Down Payment – Documents Checklist – Debt To Income – Student Loans –
NO PROBLEM – LEARN ABOUT – NO CREDIT SCORE FHA MORTGAGE LENDERS
CAN I QUALIFY FOR AN FHA MORTGAGE WITH NO CREDIT SCORE? ANSWER = YES YOU CAN! Lack of credit a credit score or trades lines or a FHA mortgage applicant’s decision to not use credit may not be used as the sole basis for rejecting an FHA mortgage application. For FHA mortgage applicants without a credit score, the FHA mortgage lender must obtain a Non-Traditional Mortgage Credit Report from a credit reporting company or independently develop the FHA mortgage applicant’s credit history.
CAN FHA MORTGAGE LENDERS USE FOREIGN SOURCES TO ESTABLISH CREDIT HISTORY? Foreign sources of non traditional credit that can be used if adequately documented and verified by the lender to help establish the credit or payment history of a borrower. The FHA mortgage lender is fully responsible for determining the authenticity of these foreign sources. If the lender has any doubts about the authenticity of the foreign sources of credit, then the lender will not accept or use them.
NO CREDIT SCORE FHA MORTGAGE LENDERS QUALIFYING CREDIT EXPLAINED-If you have minimal verified payments reflected on your credit report for a full 12 months, you may need to provide alternate trade lines to prove to the lender your willingness to repay debt.
NO CREDIT SCORE LOAN APPLICANTS WILL NEED TO PROVIDE THE FOLLOWING TO BUILD A CREDIT HISTORY:
1. 12 Months verified payment history. Either 12 months canceled checks / wire transfer or a verification of rent from a true management company. Private land lord letters will NOT satisfy the lender. You may be able to avoid verified rental history requirement if you have 3 months of future mortgage payments after your down payment and closing cost in your account at closing.
2. ( 3 ) Alternate trade lines- from 3 different sources.• Alternate trade lines CAN NOT INCLUDE hand written letters. They must be verified bank payments or come from a direct service provider. Examples of alternate trade lines include Electric company, water, cell phone, car insurance, gym membership or any other verified payment history. Usually you can go online and print out a 1-page payment history for a full 12 months.
• Must be NO 30 day late payments in the past 12 months.
• Must have your name and address on the trade line.
NO CREDIT SCORE FHA MORTGAGE LENDERS- Most FHA mortgage programs require FHA mortgage applicants to have at least (3) three positive open and active trade lines on their credit report for the last 12 months. For most FHA mortgage lenders the no credit score removes them from consideration for a conventional FHA mortgage. However, there are (3) three government-backed FHA mortgage loan programs will permit nontraditional credit lines in place traditional credit trade lines. These FHA mortgage programs include the FHA, USDA, VA loans. While these FHA mortgage programs have minimum requirements, each participating FHA mortgage lender is free to enforce their own no credit approval guidelines. Fill out a Full FHA mortgage application and learn how we can help you qualify for a no credit score FHA mortgage.
HOW TO DEVELOP A NONTRADITIONAL CREDIT HISTORY FOR NO CREDIT SCORE MORTGAGE APPLICANTS- All government-baked FHA mortgage lenders use the same method for building and documenting non-traditional credit histories. Even if a FHA mortgage applicant does not have a credit card or installment payments, odds are they have made some form of monthly payments borrowers can show consecutively for the last 12 months. FHA mortgage applicants with no credit can use the canceled checks or letters from direct service providers to prove timely payment history for the last 12 months. Acceptable examples include: rental history, car insurance, utility bills, cell phone bills, daycare, and car insurance payments. Proof of these timely payments provides to the FHA mortgage lender a financial record that would indicate how the FHA mortgage applicant would handle credit in the future. Please note: These 3 accounts must be open for at least one year, a full 12 months no late or missed payments.
FHA MORTGAGE LOANS WITH NO CREDIT- The USDA earmarks its FHA mortgage program for buyers of primary residences in rural areas, but many suburban counties areas are eligible for these FHA mortgage loans. These zero-down FHA mortgage loans have a small upfront fee that buyers can finance within the loan, but no (MI) monthly insurance premiums. There are however maximum income limits for the USDA FHA mortgage and special terms available for low-income FHA mortgage applicants.
VA NO CREDIT SCORE MORTGAGE LENDERS- VA loans are only for veterans and their eligible spouses, as well as those who have served within civil organizations. Eligible spouses include those who are married to a prisoner of war or one who is missing in action or un remarried spouses of a service member who died in action or of a service-related injury. VA FHA mortgage loans require no down payment or monthly fee, but there is an upfront funding fee that can be financed into the loan making the VA FHA mortgage a 100% no money down FHA mortgage loan.
FHA MORTGAGE LOANS- FHA Mortgage lenders provide much needed FHA loan buyers in every city and county in the USA. FHA loans have no income limits, but FHA mortgage lenders have maximum loan limits that vary from county to county. There is both an (UFMIP) upfront funding fee that can be included in the loan, as well as a small fee (MIP) FHA mortgage insurance premium added to the monthly payment.
BAD CREDIT NO CREDIT FHA MORTGAGE LENDERS- A FHA mortgage applicant cannot use a nontraditional credit line to correct or compensate for poor credit, such as a judgment, or past collections, no matter how thin his credit is. Even if there is only one judgment or collection on a FHA mortgage applicants credit report, it will have to be settled with the creditor. Settling an old judgment or collection can be a great way to get a large item removed off one’s credit for pennies on the dollar. Also lowering the balance on an open and active account to less than 30% of the account limit can be a good way to increase a bad credit score.
POPULAR NO CREDIT SCORE QUESTIONS AND ANSWERS
- Is a borrower eligible for FHA insured financing if he or she does not have any credit history? Lack of traditional credit or a Borrower’s decision to not use credit may not be used as the sole basis for rejecting the mortgage application. For Borrowers without a credit score, the lender must obtain a Non-Traditional Mortgage
- What are the credit report requirements for a manually underwritten mortgage? use the same credit report and credit scores sent to TOTAL. If a traditional credit report is not available, the Mortgagee must develop a non-traditional credit history for the Borrower. The Mortgagee must obtain an updated creditCategory: Credit History/Credit Report
- What are the credit report requirements when using the TOTAL Mortgage Scorecard? The Mortgagee must use a traditional credit report. A Tri-Merged Credit Report (TRMCR) must be obtained from an independent consumer reporting agency. If a traditional credit report is not available or the traditional credit report
- Does FHA require a minimum credit score and how is it determined? is at or above 580 the borrower is eligible for maximum financing. The lender must downgrade and manually underwrite a mortgage that received an Accept recommendation if only the non-occupying co-borrower has a credit score.
- What are the credit report requirements for HECM borrowers? but not referenced in the credit report by using the procedures for Independent Verification of Non-Traditional Credit History provided in Section 2.10 of the HECM Financial Assessment and Property Charge Guide.
- How are disputed credit accounts considered for manually underwritten loans? derogatory credit resulting from identity theft, credit card theft or unauthorized use. • Accounts of a non-borrowing spouse in a community property state
- What are FHA’s policies regarding credit history when manually underwriting a mortgage?The underwriter must examine the Borrower’s overall pattern of credit behavior, not just isolated unsatisfactory or slow payments, to determine the Borrower’s creditworthiness. The underwriter must evaluate the Borrower’s payment.
- How are disputed credit accounts considered when using the TOTAL Scorecard? these balances, the lender must include a copy of the police report or other documentation from the creditor to support the status of the accounts. • Accounts of a non-borrowing spouse in a community property state.
- Can a lender use foreign sources to help establish the credit, including the nontraditional credit, of a borrower?Foreign sources of credit that can be adequately documented and verified by the lender may be used to help establish the credit, including nontraditional credit, of a borrower. The lender is fully responsible for determining the authenticity.
- What is acceptable for developing a borrower’s non-traditional credit history in a Home Equity Conversion Mortgage (HECM) for purchase?To be sufficient to establish the Borrower’s credit, the credit history must include three credit references, including at least one of the following: rental housing payments (subject to independent verification if the Borrower.
- Do I have to consider the credit and debts of a non-purchasing spouse in a community property state?specifically excluded by state law. The Lender must not consider the credit history of a non-borrowing spouse. The non-borrowing spouse’s credit history is not considered a reason to deny a mortgage application. The lender must.
- For whom must the Lender obtain a credit report?The Lender must obtain a credit report for each borrower who will be obligated on the mortgage note. Joint reports may be ordered for individuals with joint accounts. The Lender must obtain a credit report for a non-borrowing spouse who.
- Is a borrower eligible for an FHA loan if the borrower has participated in consumer credit counseling? Participating in a consumer credit counseling program does not disqualify a Borrower from obtaining an FHA-insured mortgage. For manually underwritten loans the lender must document.
- Will a certain score on the Supplemental Performance Metric (SPM) automatically trigger Credit Watch? The Supplemental Performance Metric (SPM) is used to provide additional information in FHA’s overall evaluation of a Mortgagee’s performance. FHA’s Credit Watch triggers are not changed. The initial evaluation.
- If I am listed in HUD’s Credit Alert Verification Reporting System (CAIVRS), what does that mean?. FHA-approved Mortgagees (Lenders) are required to determine whether Borrowers have delinquent federal non-tax debt. Mortgagees may obtain information on delinquent federal debts from public records, credit reports (or equivalent), and must.
- What are FHA’s policies regarding credit history when using the TOTAL scorecard?The Mortgagee must evaluate the Borrower’s credit history in accordance with the Accept Risk Classifications Requiring a Downgrade to Manual Underwriting found in Handbook 4000.1 II.A.4.a.v. If a determination is made.
- August 2016 – HUD FHA Handbook 4000.1 Frequently Asked Questions Update–06ml.pdf Revised Form 92900-A Loan-Level Certification: http://portal.hud.gov/hudportal/documents/huddoc?id=16-06mlatch.pdf ML 2016-06 and attachment 4000.1 Credit Underwriting; Documentation Requirements 2. Does