When it comes to obtaining a mortgage, having no credit score or limited credit history can pose challenges. However, there are mortgage products available that cater to such situations. In this article, we’ll explore three popular options: FHA, VA, and Fannie Mae Products. These products offer solutions for borrowers without credit scores or when one or more borrower(s) on the loan does not have a credit score. Although the requirements for all three of these products are similar, there are program specific details that are outlined below.
Note that in all three cases lenders will look at non-traditional credit history and may consider the following non-traditional credit references:
- Rental housing payments, telephone service, or utility bills in the borrower’s name.
- Secondary references, such as insurance, childcare provider, school tuition, and more.
- For VA loans, a 24-month housing history is required.
- Documentation for minimum non-traditional credit references must be provided for each borrower without a credit score.
FHA Loan:
- Property: Must be a one- to four-unit principal residence.
- Manufactured Housing: Single-width properties are accepted.
- Credit Score: No credit score required. Maximum LTV (Loan-to-Value) is 90%, and qualifying ratios are 31/43.
- Non-Occupant Co-Borrowers: Permitted.
- Manual Underwriting: One borrower with no credit score, or no borrower with a credit score, is manually underwritten. AUS (Automated Underwriting System) approval is not available.
- Acceptable Transactions: Purchase, limited cash-out refinance, and cash-out refinance.
VA Loan:
- Property: Must be a one- to four-unit principal residence, and all borrowers must occupy the property.
- Manufactured Housing: Single-width properties are accepted.
- LTV Restrictions: No LTV restrictions with no score scenarios.
- Manual Underwriting: One borrower with no credit score, or no borrower with a credit score, is manually underwritten. AUS approval is not available.
- Purchase and Cash-Out Refinance: Available if VA eligible.
- VA Manual Underwrite: Requires 24 months of housing history.
Fannie Mae Loan:
- Property: Must be a one- to four-unit principal residence, and all borrowers must occupy the property.
- Manufactured Housing: Single-width properties are accepted.
- Non-Occupant Co-Borrowers: Permitted for manual underwrite when one borrower has no credit score.
- LTV Restrictions: No LTV restrictions with no score scenarios.
- Manual Underwriting: One borrower with no credit score, or no borrower with a credit score, requires AUS approval. Fannie Mae manual underwrite available case by case.
- Transaction Type: Purchase or limited cash-out refinance.
- Reserves: May be required as determined by Desktop Underwriter (DU). DU is Fannie Mae’s automated underwriting system.