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nykorh · Joined: 05 Aug 2008 Posts: 5 3.31 Dollars($)

Qualifying for an FHA Loan without proof of on time rental payments

I was curious if I could qualify for an FHA loan WITHOUT having 6-12 months of consistent on time rental payments.

I could write the LOE of all LOE's with what I have gone through over the last 2 years, but I have been my current rental home for a year and a half now and have always paid. At this point, I only have 1 month of on time payments and plan to keep it current going forward.

But my question is if I am trying to qualifying under the FHA Non-Traditional credit option, will this be my downfall?

I have found a great piece of property and would hate for this one to get away and at this point, the rental payment proof is my only concern.

sweeney · Posted: Tue Aug 05, 2008 7:24 pm Post subject:

Yes, sorry to say, that will probably be an issue when you go to apply.

nykorh · Joined: 05 Aug 2008 Posts: 5 3.31 Dollars($)

Thanks Mike. What is the absolute minimum # of on time payments do you think I should have under my belt? Assuming I have 3 other positive tradelines (1 1/2 yrs +), a good down (10%) and a mid credit score of 615 or higher?

sweeney · Posted: Tue Aug 05, 2008 7:49 pm Post subject:

Well, if you go FHA, 12 mos. And you only need 3% down (actually 3.5% now) so you can keep the rest in the bank as a cushion. Also, if you pay everything on time, that credit score should come up down the road. Hope that helps, good luck to you! Smile

brian1 · Posted: Tue Aug 05, 2008 8:57 pm Post subject:

Actually that is not true. If you recieve an approve eligible from an automated underwriting they do not require prrof of rent. Have you been 30 plus days late? Or just a few days late here and there?

Brian

sweeney · Posted: Tue Aug 05, 2008 11:17 pm Post subject:

Brian- I agree with you on the approve eligible. Lately though, our experience with underwiters has been frustrating, to say the least. They almost completely disregard findings, revert to the 4155, and are requesting all kinds of extra documentation. I'm sure to cover themselves in light of recent events. Interesting times in this industry...

Guest

Brian/Mike, thanks for the additional info. In the last consecutive 15 months of rental history, I have been on time (is less than 10 days considered late? how embarrasing is this!) 6 times. I have some 10 day lates, but a few 23-28 days late. I am fixing this though and going forward it will not be an issue. I am curious though, aren't all FHA loans subject to manual underwriting?

Niicss · Posted: Thu Aug 07, 2008 4:44 am Post subject:

Welcome back Nyko.

If you have good credit and higher credit score then the mortgage company will not go for manual underwriting. But if your credit score is low and your credit report has too many negative items on it then the mortgage company can go for the manual underwriting.

Guest

Thanks Niicss. Is there a certain score marker that qualifies you for automated underwiting instead of manual? If yes, then it seems like I need to be at that score so the rental history is a non issue. For the record, does it help if my landlord is also my buying agent and would write a letter stating he knew that I was always technically "good for it?"

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Nyko.

Welcome back.

FHA is not a score driven program. If you have any late payments then you cannot get FHA loan. But you have made all the payments on time and if you can show the ability to pay off the loan then there is no need for manual underwriting. Have you contacted with any FHA approved lenders?

Best of luck,
Larry

Guest

I have a similar situation. I went through bankruptcy and will be out in March of 2009 for 2 years. My credit scores are on average 630 between the 3 reports. I have paid my rent late but not more than 10 days late. Will I have to get verification from my landlord and if it hasn't gone 30 days is it still considered late? I'm looking to buy next spring.

adonis · Posted: Sun Aug 10, 2008 10:37 pm Post subject:

Welcome Ray,

I suppose it's not a late payment until the 30 day period is over. It's better if you verify this with the landlord.

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