How to Qualify for Rent Payment Consideration
Buying a home is as exciting as it is stressful, especially for first-time home buyers. However, getting your ducks in a row credit-wise can be tough and could delay the mortgage approval process. Fortunately, if you're making the switch from renting a home to buying one, recent updates to Fannie Mae's underwriting guidelines could work in your favor.
Typically mortgage lenders consider an applicant's credit score during the application process. If your lender works with Fannie Mae, the company that backs most mortgages in the U.S., your rental payment history could also help you secure the loan.
How Does Rent Payment Consideration Work?
With this new feature, Fannie Mae will automatically recommend that your lender factor in your rental payment history if they believe your case would benefit from it. That means, if you've been making rental payments of over $300 per month and the lender is able to obtain a 12-month Verification of Asset (VOA) report, then your likelihood of qualifying for a mortgage may improve.
Rent Payment Consideration Qualifications
To be eligible for rent payment consideration, a borrower must:
- Be a first-time home buyer
- Have been renting for at least 12 months with a rent payment of $300 or more per month
- Have a credit score
Other qualifications that must be met for rental payment consideration:
- The mortgage loan must be a purchase transaction
- The property must be secured by a principal residence
Before this update, first-time home buyers were at a disadvantage if their rental history was not on their credit report. Now, a record of consistent rental payments can help give homebuyers the boost they need to secure a mortgage.
Mortgages That Work for You
If you're a first-time home buyer applying for a mortgage, reach out to Butler Mortgage. For over 25 years, we've worked with both first-time and seasoned buyers wanting to own a home in Central Florida and throughout the state. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.
