California Bad Credit Mortgage Lenders With Compensating Factors

California Bad Credit Mortgage Lenders With Compensating Factors

US Mortgage Lenders specializes in originating and funding California Bad Credit Mortgage Loans with Compensating factors. CALIFORNIA BAD CREDIT MORTGAGE LENDERS APPROVALS WITH:  

California Compensating Factor Guideline Description

Housing Expense Payments- The California Bad Credit Mortgage Applicant has successfully demonstrated the ability to pay housing expenses greater than or equal to the proposed monthly housing expenses for the new mortgage over the past 12-24 months.

Large Down Payment- The California Bad Credit Mortgage Applicant makes a large down payment toward the purchase of the property.

Accumulated Savings- The California Bad Credit Mortgage Applicant has demonstrated an ability to accumulate savings, and a conservative attitude toward using credit.

Previous Credit History-  A California Bad Credit Mortgage Applicant’s previous credit history shows that he/she has the ability to devote a greater portion of income to housing expenses.

Compensation or Income Not Reflected in Effective Income The California Bad Credit Mortgage Applicant receives documented compensation or income that is not reflected in effective income, but directly affects his/her ability to pay the mortgage. This type of income includes food stamps and similar public benefits.

Minimal Housing Payment Expense Increase- There is only a minimal increase in the California Bad Credit Mortgage Applicant’s housing expense.

General Information ON California Bad Credit Mortgage Applicant Qualifying With California Bad Credit

This topic contains general information on qualifying a California Bad Credit Mortgage Applicant, including lender responsibility when qualifying a California Bad Credit Mortgage Applicant, and the importance of careful underwriting analysis.

California Bad Credit Mortgage Lenders Programs

    • California Bad Credit Private Mortgage Lenders
    • California Bad Credit FHA Mortgage Lenders
    • California Bad Credit VA Mortgage Lenders

PORTFOLIO – California Bad Credit MORTGAGE LENDERS

    • Purchase 1 day after bankruptcy, foreclosure, short sale and deed in lieu of foreclosure up to 2.5 million.  These are not subprime loans, but they do often have higher interest rates and higher closing costs.
    • Portfolio California Bad Credit mortgage lenders offer and approve California Bad Credit mortgage applicants  based on a common sense approach. California Bad Credit private mortgage lenders are making approvals based on a commonsense approach lending rather than a credit score driven approach.
  • Examples include 12 months timely rental history, high credit scores, lower loan to value (larger down payments), and reserves (future mortgage payments in the account at closing).

FHA – California Bad Credit MORTGAGE LENDERS

    • Down payment only 3.5% of the purchase price.
    • Sellers can credit the buyer’s up to 6% of sales price towards buyers costs and pre-paid.
    • No reserves or future payments in account required.
    • Bankruptcy or Foreclosure regulated closing costs.

California Bad Credit MORTGAGE LENDERS – AFTER BANKRUPTCY or  FORECLOSURE

    • 12 months after a chapter 13 Bankruptcy Bankruptcy or Foreclosure mortgage Lender approvals!
    • 24 months after a chapter 7 Bankruptcy Bankruptcy or Foreclosure mortgage Lender approvals!
    • 3 years after a Foreclosure Bankruptcy or Foreclosure mortgage Lender approvals!
    • No Credit Score Bankruptcy or Foreclosure mortgage Lender approvals!
    • 580 required for 96.5% financing or 3.5% down payment Bankruptcy or Foreclosure mortgage Lender approvals.
    • 500 required for 90% financing or 10% down payment Bankruptcy or Foreclosure mortgage Lender approvals.
    • California Bad Credit with minimum 500 FICO credit score with 10% Down Payment Bankruptcy or Foreclosure. For Bankruptcy or Foreclosure mortgage applicants with credit scores between 500 and 579 must make down payments of at least 10% down!

California Bad Credit MORTGAGE LENDERS ALLOW HIGHER DEBT TO INCOME & EASIER JOB QUALIFYING

    • Bankruptcy or Foreclosure allows higher debt ratio’s than any conventional mortgage loan programs.
    • Less than two years on the same job is OK!
    • Self-employed buyers can also qualify with Bankruptcy or Foreclosure Mortgage Lenders.
    • Chapter 13 Bankruptcy- You may apply for a Bankruptcy or Foreclosure mortgage after your bankruptcy has been discharged for 12 Months or  (1) year with a Chapter 13 Bankruptcy. You must have 0 x 30 day late payments, and permission from the chapter 13 trustee.
    • Chapter 7 Bankruptcy- You may apply for a Bankruptcy or Foreclosure mortgage after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a Bankruptcy or Foreclosure insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
    • Foreclosure – You may apply for a Bankruptcy or Foreclosure insured loan THREE (3) years after the Foreclosure sale/deed transfer date. You may have to search county records office to locate the deed in order to count a full 3 years.
    • Short Sale / Deed in Lieu – You may apply for a Bankruptcy or Foreclosure insured loan THREE (3) years after the sale date of your foreclosure. Bankruptcy or Foreclosure treats a short sale the same as a Foreclosure for now.You may have to search county records office to locate the deed in order to count a full 3 years.
    • Credit must be re-established no late payments in past 12-24 months, depending on hardship
  • Application Date must be after the above waiting period to be eligible for Bankruptcy or Foreclosure financing after hardship.You may have to search county records office to locate the deed transfer out of your name in order to count a full 3 years.

Bankruptcy or Foreclosure California Bad Credit Mortgage Lenders minimum 580 credit score.

VA- California Bad Credit MORTGAGE LENDERS APPROVALS!

    • Chapter 13 Bankruptcy – Once you have finished making all payments satisfactorily, the mortgage lender may conclude that you have established satisfactory credit.
      • If you have made at least 12 months of timely payments and the Trustee or the Bankruptcy Judge approves of the new home purchase, the mortgage lender will approve financing after a chapter 13 bankruptcy.
    • Chapter 7 Bankruptcy – You may apply for a VA mortgage loan TWO (2) years after a chapter 7 Bankruptcy.
    • Foreclosure / Deed in Lieu – You may apply for a VA mortgage loan TWO (2) years after a foreclosure.
    • Short Sale – VA does not recognize a short sale as a derogatory event, however, most mortgage lenders do. Most lenders will require a full 2 years after the deed was transferred out of your name and you re-establish credit.
    • Credit must be re-established with a minimum 550 credit score
  • Application Date must be after the above waiting period to be eligible for VA mortgage after hardship.

VA Mortgage Lenders Require A minimum 580 credit score.

USDA – California Bad Credit MORTGAGE APPROVALS!

    • Foreclosure – You may apply for a USDA rural loan THREE (3) years after a Foreclosure.
    • Bankruptcy – You may apply for a USDA rural loan THREE (3) years after the discharge of Chapter 7 or 13 Bankruptcy.
  • Short Sale / Deed in Lieu of Foreclosure – mortgage lenders require 3 years after a foreclosure.

USDA California Bad Credit Mortgage Lenders Require A minimum 580 credit score.

CONVENTIONAL– California Bad Credit  MORTGAGE LENDERS!

    • Foreclosure – You may apply for a Conventional mortgage, Fannie Mae loan (7) SEVEN years after the sale date of your foreclosure.
    • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
    • Short Sale / Deed in Lieu of Foreclosure –Waiting period for foreclosure that was included in Bankruptcy If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date. California Bad Credit mortgage lenders Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
    • Judgements and Liens- California Bad Credit conventional mortgage lenders require that all outstanding liens that are in the Public Records section of the credit report will be paid off at or prior to closing. Documentation of the satisfaction of these Judgements and Liens liabilities, along with verification of funds sufficient to satisfy these obligations, must also be maintained in the permanent loan file.
  • The following table summarizes the waiting period requirements for all significant derogatory credit events.
Derogatory Event Waiting Period Requirements Waiting Period with Extenuating Circumstances
Bankruptcy — Chapter 7 or 11 4 years 2 years
Bankruptcy — Chapter 13
    • 2 years from discharge date
  • 4 years from dismissal date
    • 2 years from discharge date
  • 2 years from dismissal date
Multiple Bankruptcy Filings 5 years if more than one filing within the past 7 years 3 years from the most recent discharge or dismissal date
Foreclosure 7 years 3 years

Additional requirements after 3 years up to 7 years:

    • 90% maximum LTV ratios
    • Purchase, principal residence
  • Limited cash-out refinance, all occupancy types
Deed-in-Lieu of Foreclosure, Preforeclosure Sale, or Charge-Off of Mortgage Account 4 years 2 years

Bad Credit Mortgage Lender Responsibility When Qualifying a California Bad Credit Mortgage Applicant

The lender is responsible for adequately analyzing the probability that a California Bad Credit Mortgage Applicant will be able to repay the mortgage obligation according to the terms of the loan. This responsibility includes using qualifying ratios and compensating factors when qualifying a California Bad Credit Mortgage Applicant. Qualifying ratios can be exceeded when significant compensating factors exist.

Importance of Careful California Bad Credit Underwriting Analysis

Underwriting requires a careful analysis of many aspects of the mortgage. Each loan is a separate and unique transaction, and there may be multiple factors that demonstrate a California Bad Credit Mortgage Applicant’s ability and willingness to make timely mortgage payments. Simply establishing that a loan transaction meets minimal standards does not necessarily constitute prudent underwriting. When qualifying a California Bad Credit Mortgage Applicant, it is important to avoid the danger of “layering flexibilities” when assessing the mortgage insurance risk.

California Bad Credit Mortgage Lenders Qualifying Ratios

This topic contains information on determining ratios to qualify a California Bad Credit Mortgage Applicant, including  general information about qualifying ratios mortgage payment expense to effective income ratio total fixed payments to effective income ratio, and  estimating real estate taxes when determining qualifying ratios. Qualifying ratios are used to determine if the California Bad Credit Mortgage Applicant can reasonably be expected to meet the expenses involved in home ownership, and provide for his/her family. In order to make this determination, the lender must calculate. The relationship of total obligations to income is considered acceptable if the total mortgage payment and all recurring monthly obligations do not exceed 43% of the gross effective income.

California Bad Credit Mortgage Lenders Compensating Factors

This topic contains information on using compensating factors to qualify a California Bad Credit Mortgage Applicant, including documenting compensating factors and compensating factors benchmark guidelines.

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