Yesterday, we mentioned a borrower who could not qualify for mortgage financing b/c he had no credit. There is an exception, however, that we did not mention for brevity’s sake.
The borrower will likely qualify for FHA financing with a “Manual Underwrite” and “Alternative Credit.”
99% of lenders will NOT approve a loan unless it is eligible for an “Automated Approval” known as either “DU,” “AUS” or “LP.”
Some qualified borrowers, however, simply cannot get an “automated approval” b/c of a lack of credit, an error on a credit report, or low credit scores.
If such borrowers have low debt ratios and no recent late payments, they can qualify for a “Manual Underwrite.” This is an old-fashioned style of very conservative underwriting that involves an underwriter evaluating every aspect of a credit file.
Our borrower above would also have to provide “alternative credit;” he would have to show strong payment histories for utility bills, phone bills, insurance bills, etc.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
