Collections and Charge-Offs? We Have Your Mortgage Solution!

At MortgageDepot, we believe that your financial challenges of the past should not prevent you from achieving your real estate goals in the future. If you need a mortgage in Pennsylvania and have collections and charge-off accounts on your record, we will help you forge a path toward home ownership.

When it comes to collections and charge-off accounts, Fannie Mae mortgages and FHA mortgages don’t play by the same rules. To effectively navigate these situations, you need to understand the nuances of these loan opportunities.

Fortunately, you don’t need to do this alone. MortgageDepot’s experienced loan officers know the ins and outs of Fannie Mae and FHA loans, and we will explain them in easy-to-understand terms.

We believe that knowledge empowers our clients, so here is a quick rundown of how Fannie Mae and the FHA handle collections and charge-off accounts.

FHA Loans: Within Reach for Challenged Borrowers

FHA loans are sometimes considered a go-to for borrowers with charge-off accounts. Here’s what you need to know about FHA loans and collections:

• To qualify for an FHA loan, collection accounts of $2,000 or greater must be paid off.
• If the borrower owes $2,000 or more in collections without a repayment plan, 5% of the collection’s balance may be included in the debt-to-income ratio. If this occurs, the borrower might still qualify for an FHA loan.
• Medical debt and debts more than two years old are exempt from these guidelines.

Fannie Mae Loans: Another Possibility

Fannie Mae loans, also known as conventional loans, typically have stricter guidelines than FHA loans. It’s still possible to qualify for a Fannie Mae loan if you have looming charge-off accounts. Here’s how:

• If you need a mortgage for a single-unit primary residence, you don’t need to pay off non-mortgage collections and charge-offs. This guideline applies to any collections amount.
• If you are applying for a mortgage for a second home, all non-mortgage collections and charge-offs exceeding $5,000 must be paid off. This guideline also applies to primary residences with between two and four units.
• If you plan to purchase an investment property, you must pay off non-mortgage charge-offs of $250 or more before closing. You must also pay accounts that total more than $1,000 in full before closing.

Contact MortgageDepot Today!

At MortgageDepot, we know that you have goals. We also understand that some goals seem worlds away when you have collections and charge-off accounts in your financial history. If you need a mortgage in Pennsylvania, contact us today. We specialize in taking the most challenging borrower situations and turning them into real estate success!

Call us at 717-803-2800 today at or email us here for more information.