Borrowers with NO FICO Score

No Fico Score, No Problem! The FHA loan will fit!

  • *580+: Borrowers with a minimum decision credit score at or above 580 are eligible for maximum financing – 96.5% LTV or 99.5% of the sales price with CHF Access. (CHF ACCESS is 99.5% with 2nd of 3% and .5% down payment)
  • *500 – 579: Borrowers with a minimum credit score between 500 and 579 are limited to 90% LTV. 10% down payment. *< 500: Borrowers with a minimum credit score of less than 500 are not eligible for FHA-insured mortgage financing.

 

ALTERNATIVE CREDIT REFERENCES:

GROUP 1 – Preferred References (Non-Traditional Credit borrower)

  • Rental Housing Payment
  • *VOR from Professional Management Company
  • *12 mos. cancelled checks if using Landlord or renting from family member
  • *LOE plus Budget Letter if living with relatives and no rental verification
  • Utilities – Includes Gas, Electricity, Water, Cable TV, Land line home phone

 

GROUP 2 – Non-Preferred References:

(Insufficient Credit borrower or use as additional items for Non-Traditional Credit Borrowers)

  • Insurance Coverage – Includes Auto, Life, Medical, Renters
  • Cell Phone
  • Internet Services
  • Child Care Payments
  • School Tuition
  • Retail Stores – Includes Furniture, Rent-to-Own, Appliances, Specialty, Department Stores
  • Personal Loans
  • Storage Units
  • Auto leases
  • 12 months savings by regular deposits with NO NSF’s

 

NON-TRADITIONAL CREDIT BORROWERS:

Non Traditional Credit – Borrowers w/ No Fico Scores or Limited Trade-lines

  • *Provide at least three (3) credit references rated at least 12 months. At least 1 reference must be from Group 1 (G1 references should be exhausted before using G2 as G1 is more indicative of a borrower’s future housing payment performance.)
  • *Borrower’s with NO G1 references will be looked at as Insufficient Credit borrowers:
  • *Prefer using verification through Credit Bureaus using Nontraditional Mortgage Credit Report (NTMCR). If NTMCR is impractical or unavailable, obtain independent verification of trade references. Use public records from state, county or city records. Use published address or telephone number for that provider/creditor – don’t rely solely on information provided by the applicants
  • *Provide landlord information such as Name, Phone number to verify rental history.
  • *All references from individuals should be backed up with most recent 12 months cancelled checks.
  • *Rental references from management companies may be used in lieu of 12 months cancelled checks.
  • *Various service providers now available who develop bill payment history as well as scoring – FHA allows it for borrowers with no or little traditional credit.

*No history of delinquency on rental housing payments and other credits in last 12 months

*No new collection accounts / court records reporting (other than medical) filed within the past 12 months

 

Guidelines and Requirements 

  • For borrowers without a credit score, we must either obtain a Non-Traditional Mortgage Credit Report (NTMCR) from a credit reporting company or independently develop the borrower’s credit history.
    • The use of a NTMCR developed by a credit reporting agency that verifies the following information for all non-traditional credit references:
      • the existence of the credit providers;
      • that the credit was actually extended to the Borrower; and
      • the creditor has a published address or telephone number.
    • The NTMCR must NOT include subjective statements such as “satisfactory” or “acceptable,” must be formatted in a similar fashion to traditional references, and provide the:
      • creditor’s name;
      • date of opening;
      • high credit;
      • current status of the account;
      • required monthly payment;
      • unpaid balance; and
    • payment history in the delinquency categories (for example, 0x30 and 0x60).
  • For Credit Evaluation of those without a credit score, credit history must include at least three credit references, including at least one of the following:
    • rental housing payments (subject to independent verification if the borrower is a renter);
    • telephone service; or
    • utility company reference (if not included in the rental housing payment), including:
      • gas;
      • electricity;
      • water;
      • television service; or
      • Internet service.
  • For Rental Verification – To verify the borrower’s rental payment history, if the borrower’s rent can be verified through a rental management company (and the borrower is not renting from a family member), direct verification from the management company of the most recent 12 months payment history is acceptable.
    • If the borrower is renting from an individual landlord, 12 months cancelled checks are required.
  • Two (2) months PITIA reserves are required
  • Reserves must be from the borrower’s own funds.  No cash gifts from any source may be counted as reserves.
  • Non-Occupant co-borrowers are not permitted.
  • No more than one 30-day delinquency on payments to any utility company type reference
  • No collection accounts or court records (other than medical) filed within the past 12 months.
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