[Gustan Cho]

Manual underwriting on FHA loans refers to the process of assessing a borrower’s creditworthiness and financial situation without solely relying on automated systems or standard credit scores. This approach is typically used when borrowers have non-traditional credit histories, lower credit scores, or other factors that may not meet the automated underwriting guidelines set by the Federal Housing Administration (FHA).

Here’s how manual underwriting on FHA loans generally works:

Documentation: Borrowers are required to provide extensive documentation of their income, assets, debts, and expenses. This may include pay stubs, tax returns, bank statements, and proof of any other sources of income.

Credit Analysis: Instead of relying solely on credit scores, manual underwriters assess the borrower’s credit history in more detail. They may consider factors such as payment history on rent, utilities, and other recurring expenses, as well as explanations for any derogatory credit events.

Compensating Factors: Manual underwriters may look for compensating factors that offset weaknesses in the borrower’s application. These could include a history of timely rental payments, significant cash reserves, or stable employment.

Debt-to-Income Ratio (DTI): Manual underwriting also involves a thorough analysis of the borrower’s debt-to-income ratio. While FHA guidelines typically allow for higher DTI ratios compared to conventional loans, manual underwriters may scrutinize this ratio more closely.

Approval Process: Once all documentation is reviewed and the underwriter has assessed the borrower’s financial situation, a decision is made regarding loan approval. If approved, the loan may come with conditions or additional requirements.

Manual underwriting can provide opportunities for borrowers who may not qualify through automated systems but have sufficient financial stability to repay the loan. However, it also requires more time and effort from both the borrower and the lender due to the detailed documentation and analysis involved. Additionally, not all lenders offer manual underwriting for FHA loans, so borrowers may need to seek out lenders who specialize in this process.

[Gustan Cho]

VA loans are known for their lenient credit requirements compared to other types of mortgage loans. While there’s no official minimum credit score requirement set by the Department of Veterans Affairs (VA), most lenders will have their own credit score requirements. Veterans can qualify for VA Loans with credit scores down to 500 FICO. There is no miminum credit scores to qualify and get approve-for VA loans. The team at GCA Mortgage Group can originate and approve VA loans with low credit scores and down to 500 FICO. However, to qualify and get approve for VA loans with low credit scores and down to 500 FICO, you need to have been timely on all of your payments for the past 12 months.

Some lenders may approve VA loans for borrowers with credit scores as low as 580, but keep in mind that a lower credit score may result in higher interest rates and stricter approval criteria. Lenders may also require compensating factors, such as a stable income, low debt-to-income ratio, or a larger down payment, to offset the risk associated with a lower credit score.

It’s important for borrowers with low credit scores to shop around and compare offers from different lenders, as eligibility criteria and interest rates may vary. Additionally, working to improve your credit score before applying for a VA loan can increase your chances of approval and help you secure more favorable loan terms.

[Gustan Cho]

We are waiting for Donna to do some reasearch. I called her earlier today and she did not answer. Need to see what type of properties are in the market, property taxes,etc. I need to talk to Brent as well. By the way, what area in Louisiana were you open to buy a house? Just want to research homeowners insurance, property taxes, and property value just in case Florida is out of the buying market and priced out.

[Gustan Cho]

Mortgage lenders typically ask for CPA (Certified Public Accountant) letters from self-employed borrowers for several reasons:

Verification of income: Self-employed individuals often have variable income streams, making it more challenging for lenders to assess their financial stability. A CPA letter can provide verification of income, including details such as average income, profitability of the business, and consistency of earnings over time.

Confirmation of business viability: Lenders want to ensure that the self-employed borrower’s business is stable and viable. A CPA letter may include information about the business’s financial health, such as its profitability, assets, liabilities, and overall financial stability.

Compliance with lending requirements: Mortgage lenders have strict underwriting guidelines and regulatory requirements that they must adhere to. Requesting a CPA letter helps lenders ensure that they are compliant with these requirements and have sufficient documentation to support the borrower’s financial situation.

Reduction of risk: Lenders use CPA letters as a risk mitigation strategy to reduce the likelihood of default. By obtaining verification of income and confirmation of the borrower’s business viability, lenders can make more informed lending decisions and mitigate the risk of lending to self-employed individuals with unstable financial situations.

Overall, requesting CPA letters from self-employed borrowers helps lenders accurately assess their financial situation, verify their income, and mitigate the risk associated with lending to individuals whose income may be less predictable than salaried employees.

[Gustan Cho]

Peter, it is a pleasure to be working with you and Doreen @Peter.gun . I spoke with Donna yesterday for quite some time and went over the potential options on your pre-approval. The issue we have in the state of Florida is the homeowners insurance. I did try to get a hold of @Brent yesterday and texted him the property address but he was in meeting all day. I think we got the credit issue fixed thanks to @Ali but now we need to tackle the debt-to-income ratio situation. Here is the mortgage calculator where you can plug in the property info. Since it will be a manual underwrite, the maximum debt-to-income ratio will be reduced to 40% front-end and 50% back-end. If we can get the errors of Doreen off the credit report, we should get an approve eligible and the maximum front-end debt-to-income ratio would be 46.9% and back-end debt-to-income ratio would be 56.9% Per Brent, older homes in Florida, the homeowners insurance can go as high as $4,000 to $8,000. Many states, homeowners insurance is not greater thant $600 to $1,000.

Here is the mortgage calculator

http://www.gustancho.com/best-mortgage-calculator

gustancho.com

Best Mortgage Calculator | PITI, PMI, MIP, and DTI

We are at Gustan Cho Associates, You easily check your mortgage eligibility with the best mortgage calculator With PITI, PMI, MIP, HOA, and DTI.

[Gustan Cho]

Thank you Ali. How about a little more details on the program you have, videos power point presentation. I will send blast this to all my contacts. Thank you

[Gustan Cho]

@Peter.gun Ali has recently helped one of my borrowers get qualified for a home loan where the creditor misreported his information on the credit bureaus. The creditor now faces a potential lawsuit for victimizing my borrowers

[Gustan Cho]

I like to introduce you to Ali the owner and President of Aldiva, Inc. Ali has helped numerous borrowers at GCA MORTGAGE GROUP on credit repair, third party litigation services for consumers who were victims of credit reporting act violations self Employed borrowers who needs CPA letters, people who need to form LLCs and sub-chapter S corporations, homebuyers who need ITIN, and borrowers who need advice on getting approved for residential, business, and commercial loans. Contact Ali @Ali if you need any further information about her services. Ali please post your company information and contact information on this forum. Aldiva, Inc. is highly recommended and she goes above and beyond for all her clients.

[Gustan Cho]

Christian Sorenson @Christian Sorensen will attest to this but CPA letters are asked by mortgage underwriters of not just non-QM loans but also self-employed borrowers of government and conventional loans.