Though it always helps to have a good credit score and financial track record, the team at Transparent Mortgage knows that might not always be the case for certain home buyers looking for a mortgage loan. Non-traditional credit qualification is the solution.

At Transparent Mortgage, borrowers can qualify for a conventional Fannie Mae (DU) 30-year mortgage loan by using non-traditional credit. There are numerous reasons why someone might not have a credit score. Some examples include non-permanent resident aliens, foreign nationals and younger people who may not have enough credit established to generate a score. However, if they have a job or steady source of income and can show some proof of non-traditional credit, non-traditional credit loan approval is possible.

Here are the criteria for non-traditional credit mortgage loans:

  • Single-family unit that is your primary residence. No manufactured homes, second homes, investment properties (non-owner occupied) or multi-family properties are allowed.
  • No high-balance loans. Amounts must conform to applicable levels.
  • Max DTI of 40%
  • Max LTV/CLTV of 90%
  • No Cash Refinance or purchase loans only
  • DU approval required
  • Non-occupant co-borrowers are not allowed on loan

A standard credit check will be performed as standard to make sure the borrower does not have an existing credit score. If there is more than one borrower on the loan and all of them need to use non-traditional credit to qualify, at least one of them will need to complete what’s called “pre-purchase homeownership education” before the loan can close.

What is required to qualify for non-traditional credit?

  • Each borrower without a credit score will need to produce two (2) sources* of non-traditional credit proof.
  • Underwriter for DU/Fannie Mae will require proof of rental housing payments before a loan can be approved.

*Acceptable sources of non-traditional credit types include periodic payments at intervals that are no longer than every three (3) months. Some examples include utility bills, cable TV bills and mobile phone bills.

It is important to understand that those applying for a 30-year DU mortgage loan with non-traditional credit will be subject to LTV/FICO score adjustment that will affect the final terms of the loan. LTV stands for loan-to-value and the following risk-based adjustments are made based on non-traditional credit rating up to 90%.

      Less than 60% = 0.500

      60.01-70% = 1.500

      70.01-80% = 3.00

      80.01-90% = 3.00

If you are looking for a 30-year mortgage loan and have insufficient credit or no official credit score, you might qualify for non-traditional credit approval. Contact Transparent Mortgage today for a free consultation and non-traditional credit review. We’ll do whatever we can to help you get into your new home. Call us today at (619) 929-0199.







Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.