Mortgage Qualification Requirements For Home Loan Programs

This Article Is About Mortgage Qualification Requirements For Home Loan Programs

There are government and conventional loans. There are also non-QM and alternative financing loan programs. Every loan program has its own lending requirements. If a borrower cannot qualify for a government and/or conventional loan because of a recent bankruptcy, Gustan Cho Associates has non-QM loans one day out of bankruptcy and foreclosure with a 30% down payment. There are 12-month bank statement mortgages with no income tax returns required for self-employed borrowers. In this article, we will discuss and cover the mortgage qualification requirements on the dozens of mortgage loan programs.

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Mortgage Guidelines On Home Loans

As the economy remained stagnant and unemployment numbers uncertain due to those who left the labor force altogether, mortgage qualification requirements have become more stringent. There seemed no end to new mortgage regulations. However, with the election of President Donald J. Trump, the economy has been on fire in a good way. The stock market is at an all-time high. Unemployment numbers are at an all-time low. The Trump Tax Cuts has motivated the workforce and many large corporations are now moving back to the United States. However, all this good news in the economy means that there is more demand for housing and higher interest rates. The Federal Housing Finance Agency (FHFA) has increased conforming loan limits to $548,250. This increase of conforming loan limits was the third increase in the past three years. This was done because of rising housing prices. The U.S. Department Of Housing And Urban Development (HUD), the parent of FHA, has Increase FHA Loans Limits for 2021 to $356,362 for three years in a row.

Types Of Mortgage Qualification Requirements

Lenders are adding more overlays to their mortgage lending guidelines. Some are requiring reserves and lowering the debt to income ratio caps as part of their overlays. Others are increasing their minimum credit score requirements. While others are asking for more credit tradelines that have been seasoned 24 months versus 12 months.

Verification Of Rent Overlays

Still, other lenders are requiring rental verification as part of their overlays. Rental verification can only be proven by providing the lender 12 months of canceled checks. Those who are paying cash to their landlord cannot qualify as having rental verification. The above holds true unless they are renting their apartment or homes from a registered property management company.

Outstanding Collections And Charged Off Accounts

Home Buyers do not need to pay off outstanding collection accounts and charged-off accounts to qualify for VA, FHA, Conventional Loans. There are mortgage lenders who are requiring that open unsatisfied collections be paid off. FHA. VA, Fannie Mae, Freddie Mac does not require that old open unsatisfied collections be paid off. Borrowers that are told to pay outstanding collections and charged-off accounts by lenders are because that particular lender has mortgage overlays on government and conventional loans. Gustan Cho Associates has no overlays on government and/or conventional loans.

Down Payment Requirements On Conventional Loans

The 3% down payment conventional mortgage loans are now back for first-time home buyers. Fannie Mae and Freddie Mac consider anyone without ownership of a home as first-time home buyers. The minimum down payment requirement for a conventional mortgage loan is a 5% down payment. Second homes now require a minimum of 10% down payment. Investment homes require a minimum of 20% down payment. There are 15% down payment requirement investment conventional loans. To avoid mortgage insurance for conventional mortgage loans, the borrower needs to put at least a 20% down payment.

FHA Down Payment Requirements

HUD now requires an FHA mortgage insurance premium of 0.85%% of the balance of the mortgage loan for the life of the FHA mortgage loan. For those who want to qualify for a 3.5% down payment FHA-insured mortgage loan, they need a 580. For those with credit scores of 500 and 579, the minimum down payment required is a 10% down payment.

Mortgage Qualification Requirements On Conventional Loans

The minimum credit score required to qualify for conventional mortgage loans is 620. However, conventional mortgage loans are mortgage rate-sensitive. The lower the scores are, the higher the mortgage rate will be.

Condotel And Non-Warrantable Condominium Financing

Gustan Cho Associates Mortgage Group offers condotel and non-warrantable condominium financing Both condotels and non-warrantable condos need to be 500 square feet. Needs to be at least one bedroom and have a full kitchen. Non-Warrantable Condos require a 20% down payment. 30-year adjustable-rate mortgages. Condotel mortgage loans require a 25% down payment. For 2 or more units of multi-family financing, FHA only requires a 3.5% down payment. In conventional loan programs, the minimum down payment requirement is 15% for 2 or more units of multi-unit home purchases.

Mortgage Qualification Requirements On Income, Credit, Assets

A home buyer needs to have the income to support their mortgage payments and other debt obligations. Days of no doc mortgage loans are long gone. Showing proof of income can be problematic to self-employed home buyers. Gustan Cho Associates Mortgage Group offers bank statement mortgage loans for self-employed borrowers. If they write a lot off their tax returns and show very little income, self-employed borrowers can qualify for 24 months bank statement mortgage loans. No Tax Returns are required with bank statement mortgage loan programs.

Borrowers with perfect credit scores but little or no income will not qualify for traditional government and/or conventional loans unless they can get a non-occupied co-borrower. However, borrowers with poor credit but who have income can qualify for government and/or conventional loans. If credit is very bad and credit scores are low then mortgage loan originators can help in boosting up credit scores by re-establishing credit in order to qualify. It may take a little time but borrowers can qualify for a mortgage.

Mortgage Qualification Requirements On Waiting Period After Bankruptcy And Housing Event

There are mandatory waiting periods after the following:

Bankruptcy
Deed in lieu of foreclosure
Foreclosure
Short sale

FHA and VA Loans require a waiting period of 2 years from the discharge date of Chapter 7 bankruptcy with re-established credit:

For those who had a foreclosure or a deed in lieu of foreclosure, the mandatory waiting period is 3 years from the date of the sheriff’s sale or the date their name was removed from the deed to qualify for FHA Loans and USDA Loans
There is a two-year waiting period to qualify for VA Loans after Chapter 7 Bankruptcy, Foreclosure, Deed In Lieu Of Foreclosure, Short-Sale
There is a four-year waiting period to qualify for Conventional Loans after Chapter 7 Bankruptcy, Deed In Lieu Of Foreclosure, Short-Sale
The Waiting Period is seven years to qualify for Conforming Loans after foreclosure
For short sales, it is the date of the sale of the home reflected on the HUD’s settlement statement

NON-QM And Bank Statement Loans

Those who had a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, can now qualify for non-QM loans.

There is no waiting period after a housing event to qualify for non-QM loans
There is a one year waiting period after the Chapter 7 Bankruptcy discharged date
Bank Statement Mortgage Loans For Self Employed Borrowers is now available at Gustan Cho Associates

Home Buyers and Homeowners who need to qualify for a home loan with a direct lender with no mortgage overlays on government and conventional loans can contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.