No Credit Score Lenders Use Alternate Pay History To Qualify Your Credit!
- Cash – Minimum 3.5% Down payment.
- Credit – Rental history and utilities can be used to prove your payment history.
- Capacity – Debt To Income 31/43%, 1 compensating factor 35/45, 2. compensating factors 40/50.
- Collateral – Single-family homes, Townhomes, Villas, Manufactured homes, FHA Approved Condos,
How Does FHA Approve Mortgage Applicants with NO Credit?
This page will cover getting a Florida mortgage with no credit using non-traditional otherwise known as alternate credit tradelines. HUD, the parent of FHA, sets the minimum FHA credit qualifications for FHA mortgage lenders to abide by. FHA home mortgage loans are extremely popular for borrowers with less than perfect credit and or less than 20% downpayment. HUD by way of the FHA mortgage was created to help the underserved FHA mortgage applicants who recently graduated or/and FHA mortgage applicants with a previous bankruptcy, foreclosure or extenuating circumstance that may not have tradelines. That is why HUD allows borrowers to be eligible for FHA loans with no credit tradelines. Within this page, we have detailed how FHA mortgage applicants can qualify using alternate tradelines.
USE ALTERNATE TRADE LINES TO QUALIFY
- 12 Months verified payment history. Either 12 months canceled checks/wire transfer or verification of rent from a true management company. Private landlord letters will NOT satisfy the lender. You may be able to avoid the 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.
- ( 3 ) Alternate trade lines- From 3 different sources- Pick from the 3 sources listed below:
- Alternate trade lines can NOT be handwritten 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.
Do FHA Mortgage Lenders Require Minimum Credit Tradelines?
What Is Considered a Credit Tradeline?
To be considered a credit tradeline, the FHA mortgage applicants need to show 12 months of payment history on their credit report. Borrowers can qualify for a mortgage with no active credit tradelines. If the borrower has no credit scores because there are no credit tradelines that are current or in the past, FHA mortgage lenders can use nontraditional credit tradelines to qualify for an FHA loan. Nontraditional credit tradelines that FHA mortgage lenders can use to show the borrower’s creditworthiness. Examples of nontraditional credit tradelines include electric, cable, and car insurance rental history.
NO CREDIT SCORE FHA MORTGAGE LENDERS OFFER MINIMAL DOWN PAYMENT AND FEES:
- The down payment is only 3.5% of the purchase price, down payment assistance and closing costs OK!
- Sellers can credit the buyer up to 6% of the sales price towards buyers’ costs and pre-paid.
- No reserves or future payments in the account are required.
- FHA regulated closing costs.
- Read more about buying a home with an FHA mortgage Bad Credit –No Credit –FHA Guidelines –Debt To Income Limits –
NO CREDIT SCORE FHA MORTGAGE LENDERS ARE EASIER TO QUALIFY FOR:
- 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 a 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!
- Learn about FHA Qualifying Qualification Summary – Manual Underwrite – Collections-Judgement’s – Bankruptcy or Foreclosure – Compensating Factors –
NO CREDIT SCORE FHA MORTGAGE LENDERS ALLOW HIGHER DEBTS OK & EASIER QUALIFYING:
- FHA allows higher debt ratios 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 –
FHA MORTGAGE ALL PROPERTY TYPES:
- Single-family homes
- Town House- check for a lot and/or block legal descriptions.
- Villas- check for a lot and/or block legal descriptions.
- Modular Homes
- Manufactured homes
- FHA Approved condominium – Search Florida FHA Approved Condos
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 and ability to repay debt.
Many borrowers ask, “ Am I eligible for an FHA mortgage loan if I do not have any credit history?”
In conclusion, if you can document the ability to make a housing payment along with other monthly obligations you can still qualify for a no credit score mortgage. Please note the no credit score mortgage program does cap the borrower’s monthly debt obligations to 31/43. This means that no credit score borrower’s new mortgage payment can be no more than 31% of their monthly income towards the housing. And, no more than 43% of the borrower’s income is towards the housing expense plus all other payments on the credit report.
The FHA mortgage lender must use a traditional credit report, if available.
Either a Tri-Merged Credit report must be obtained from an independent credit reporting agency. If a traditional credit report is NOT available, the FHA mortgage lenders cab develop a non-traditional credit history for the Borrower by using alternative 12 months pay history to prove the ability and willingness to repay debt..
Credit reports must obtain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in an easy-to-read and understandable format, and NOT require code translations. The credit report may not contain whiteouts, erasures, or alterations. The FHA No Credit Florida mortgage lenders must retain copies of all credit reports.
The credit report must include:
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name of the lender ordering the report;
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name, address, and telephone number of the consumer-reporting agency;
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name and Social Security Number (SSN) of each Borrower; and
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the primary repository from which any particular information was pulled, for each account, listed
ALTERNATE TRADE LINES 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.
Please provide the following.
- 12 Months verified payment history. Either 12 months canceled checks/wire transfer or verification of rent from a true management company. Private landlord letters will NOT satisfy the lender. You may be able to avoid the 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.
- ( 3 ) Alternate trade lines- from 3 different sources.
- Alternate trade lines can NOT be handwritten 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 tradeline.
For informational example purposes only. This is not a commitment to lend or extend credit. All loans are subject to credit approval by the lender’s underwriter. Other restrictions may apply.
