USDA problem?

[leenburke]

Hi all, 

My husband and I are in the process of purchasing a home with a USDA mortgage.  He is the only one applying since my employment is less than 6 months old.

Credit scores: EXP: 653, TU: 687 EQ: 672

Shortsale over 3 years ago.

Last 30 day late over 1 year ago.

No unpaid collections, 1 capital one cc with $1300 limit, multiple store cards, all paid on time for 6 months. 

We live in a 2 family house owned by his parents.  We have always paid rent, but only have last 6 months paid by check, before that cash. 

Broker sent our file to bank's underwriter today and he's asking if we have more further back.  Told him no, we paid in cash prior.  

Will the lack of 12 months of cancelled rent checks be a loan killer in your opinion?  

[songsofexperience]

I believe USDA guidelines only call for verification of rent payment if the credit score is below 620. Pretty sure that's what FHA is. Can you show cash withdrawals in that amount from your bank at the same time each month? 

[leenburke]

Unfortunately, no.  Some months you can see that we made 2 cash withdrawals (each for 1/2 the rent) but there were some months we paid with cash earned from other sources.  

I guess we'll just find out when we find out.  The wait is killing us!

[ShanetheMortgageMan]

If you are able to get an approval through GUS then rental history verification won't be needed.  Ask your LO if GUS has been run yet.  Some loan officers are just cautious and ask for it up front, later to find out that it's not needed... just playing it safe.

[leenburke]

So USDA won't budge on the rent verification due to our short sale 3 years ago. We're going to go FHA instead.  Just an FYI for anyone else going through the process.

[songsofexperience]

Interesting - thanks for the update.

I'm going to hijack the thread for a quick question that maybe Shane can answer - what if you haven't been paying rent? For the last 2.5 years I've been living with my dad who has dementia. Moved 800 miles to look after him and my mum who was in end-stage cancer. She passed 3 months later. Since then I've lived with him so he doesn't have to go into a home, but that will probably have to happen soon. I've not been paying rent to him because I'm his primary care-giver. It's allowed me to pay off $10,000 in debt and start saving. Will it matter that I haven't paid rent? I did pay rent July 2010-February 2012 before I moved to look after them. Will they ask for that?

Sorry for the hijack!

[ShanetheMortgageMan]

If you don't pay rent that normally isn't a problem.  A small handful of lenders have requirements that previous rental history can be provided, but only for applicants who barely qualify credit-wise.  Your scores probably will be good enough that it's a non-factor.