What Are Lenders Overlays?

by martyna
What Are Lenders Overlays?

Capital Lending Network, Inc. is a five-star national mortgage company with no lender overlays on government and conventional loans. So what are lender overlays and why is Capital Lending Network, Inc. so special? All mortgage lenders need to abide by the minimum agency mortgage guidelines set forth by HUD, VA, USDA, Fannie Mae, Freddie Mac. However, lenders can have higher lending requirements that is above and beyond the minimum agency lending guidelines on government and conventional loans. This higher lending requirement set by each individual lender that is above and beyond the minimum agency mortgage guidelines is called lender overlays. Let’s take an example to better understand what lender overlays are. The minimum credit score required per HUD Guidelines to qualify for a 3.5% down payment FHA Loans is 580 FICO with an approve/eligible per automated underwriting system (AUS). HUD, the parent of FHA, allow borrowers to qualify for an FHA loan with credit scores down to 500 FICO with an automated AUS approval. However, any borrowers with credit scores under 580 FICO and down to a 500 credit score, a 10% down payment is required versus a 3.5% down payment. However, most lenders will require a higher credit score than 580 FICO such as a 620 to 640 credit score by their loan applicants even though FHA only requires a 580 FICO for a 3.5% down payment FHA loan. This higher credit score requirement by the individual lender is called a lender overlay on credit scores. Lenders can have lender overlays on just about anything such as debt to income ratios, outstanding collections and charged-off accounts, gift funds, non-occupant co-borrowers. Capital Lending Network, Inc. does not have any lender overlays. By no lender overlays, we mean ZERO OVERLAYS on FHA, VA, USDA, and Conventional loans. This is why not all lenders have the same mortgage guidelines on government and conventional loans due to lender overlays. CLN has a reputation of being able to do loans other lenders cannot do. Many borrowers and real estate professionals are amazed that a mortgage company like Capital Lending Network, Inc. exists. We are one of the very few national mortgage companies with no lender overlays on government and conventional loans. To qualify for a home mortgage with a national mortgage company licensed in multiple states, please contact us at Capital Lending Network, Inc. at 262-716-8151 or text us for a faster response. Or email us at gcho@capitallendingnetwork.com. The team at CLN is available 7 days a week, evenings, weekends, and holidays.