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4.Do you have a bankruptcy or foreclosure in your past? Has it been 2 years since it was discharged? If yes, move on to next step! If not, unfortunately in most cases your bankruptcy or foreclosure will need to be discharged at least 2 years or you will need to have at least 5% down payment.
5.You will need to document 24 months of recent mortgage or rental history. If you rent from a property management company we will need a Verification Of Rent completed. The form will be supplied by your mortgage lender or broker. If you rent from a private landlord, you will need 24 months cancelled checks/ or money order receipts with no payments over 30 days late. Sorry, you cannot prove your rental history if you pay your landlord cash every month, unless they are a property management company. If you are unable to document your rental history there is a way around it. Get your credit report and look for following: Do you have an active credit line on your credit report that has been open for at least 24 months? Has this credit line had any activity in last 6 months? If so, move to next step.
6.Look at your credit report. Do you have a credit line that has a 12 month history reporting? If so and as long as you have no more that 2x30 day late payments then move on to next step.
7.Look at your credit report again. Do any of your credit lines have a high limit of at least $3,000. If so, move to next step.
8.Now take one more look at your credit report. You will need 1 more additional open credit line reporting on your credit report. (It does not matter how long it has been open or how much credit line is for).
Well, congrats! You made it this far which means that your credit might qualify for a Zero Down Payment Loan. The loan program you qualified for is subject to change and is subject to additional conditions. This article should not be construed as an advertisement to lend. These are steps that I go through when trying to pre-qualify a client that has credit problems. There are many more factors to determine so please discuss this with a qualified mortgage professional.
You are probably asking yourself what you are supposed to do with information that was given to you in this article. The first thing is to contact a few mortgage companies. Ask them if they have any zero down loan programs that will go down to a 575 credit score, or whatever your credit score is. Remember, you will need at least a 575 credit score to qualify for this particular loan program. Also, in order to minimize your out of pocket expense, ask your mortgage professional if property seller is allowed to pay 6% of purchase price towards closing costs. If so, you will need to remember to negotiate that into your purchase contract when you make an offer on a house.