How to Get a Mortgage With No Credit Score: A Guide to Manual Underwriting

Having good credit is important for getting approved for most mortgages Lenders want to see you have a solid history of managing debt responsibly, But what if you don’t have established credit at all? Is homeownership still possible?

The answer is yes. You can still get a mortgage even with no credit score through a process called manual underwriting.

Manual underwriting takes a more holistic look at your financial profile beyond just your credit reports While it involves more time and documentation, it can make homeownership achievable for those with non-traditional credit

In this article, we’ll explain everything you need to know about getting a no score loan, from what documentation you need to provide to finding the right lender.

What is Manual Underwriting for No Credit Score Loans?

Manual underwriting is when an actual human loan officer or underwriter reviews your mortgage application rather than just feeding it through an automated underwriting system.

With manual underwriting, the underwriter takes a broader look at your financial situation, beyond just your credit reports. They analyze:

• Your income and employment history
• Savings and assets
• Housing payment history
• Other recurring debts and obligations
• Compensating factors that demonstrate your ability to repay

This allows borrowers with limited traditional credit or no credit score to still qualify by documenting their ability to manage financial obligations over time.

Why Do Most Mortgages Require a Minimum Credit Score?

The most common mortgage underwriting methods rely heavily on your credit scores and reports. Most conventional loans require a minimum 620 FICO score. Government-backed loans can allow scores as low as 580 in some cases.

Lenders prefer seeing decent credit scores because it shows you can handle different types of revolving and installment credit responsibly. Good credit also allows them to use automated underwriting systems, which speeds up the approval process.

But for borrowers who are just starting out or choose to live debt-free, manual underwriting provides an alternative path to homeownership.

What Documentation is Needed for No Credit Score Underwriting?

With manual underwriting, you’ll need to provide alternative documents that demonstrate your ability to manage financial obligations since you don’t have established credit reports.

Examples of documentation needed:

• Bank statements showing consistent income deposits
• Recent pay stubs documenting your stable employment
• Tax returns if self-employed
• Landlord references proving timely rent payments
• Utility bills paid on schedule (electric, water, cable, etc.)
• Cell phone payments made consistently
• Car insurance payments
• Evidence of savings in checking/savings accounts
• Retirement account balances
• Investment account statements

You’ll generally need to show timely payments for at least 12 consecutive months across multiple accounts or obligations. This establishes a pattern of reliable payment behavior in lieu of a credit score.

Tips for Getting Approved with No Credit History

When applying for a no credit score mortgage, here are some tips that can strengthen your chances of approval:

• Highlight stable income: Underwriters want to see reliable career history and income sources. Provide pay stubs showing 2+ years at your job. If self-employed, include tax returns for multiple years.

• Keep debt burdens low: The lower your monthly debts, the better. Consider paying down loans and credit cards before applying.

• Gather 12+ months of alternative credit docs: Utility bills, cell phone payments, insurance policies – pull statements showing on-time payments.

• Explain any red flags: If a document shows late payments, draft an explanation letter for the underwriter. Context can help.

• Make a large down payment: Lenders like to see your own “skin in the game.” A 20% or higher down payment often eases approval.

• Have substantial savings: Significant reserves make approval more likely. Shoot for 6-12 months’ worth of mortgage payments in the bank.

• Bring on a co-signer: A co-borrower with strong credit can really boost your chances. Their income/assets are considered too.

• Work with a portfolio lender: Smaller lenders that hold loans “in portfolio” tend to be more flexible than banks selling loans to Fannie Mae or Freddie Mac.

Finding the Right Lender for a No Credit Score Mortgage

The key is finding lenders who understand and have experience with manual underwriting. Small community banks and credit unions may be more willing to review no credit applications than mega lenders.

Here are some lenders known for their flexible manual underwriting programs:

• Churchill Mortgage – Advertises “no credit score” mortgages. Has specialized underwriters to review non-traditional credit profiles.

• Axos Bank – Allows use of non-traditional credit for purchase and refinance loans. Available in most states.

• First Liberty Financial – Will manually underwrite borrowers with no established credit history. Local branches across the U.S.

• Quontic Bank – Offers manual review for no credit score mortgages on single family residences. Based in NYC but available in many states.

• Citizens Bank – Allows use of non-traditional credit with manual underwriting. Has branches across the Northeast and Midwest.

• PenFed Credit Union – Will manually underwrite no credit score VA loans in certain circumstances. Good option for veterans/military.

It’s wise to compare several lenders’ underwriting guidelines and rates. Getting pre-approved upfront is also recommended so you know any potential issues before making an offer.

What to Expect with the Mortgage Process and Timeline

The manual underwriting process typically takes a bit longer than automated underwriting. You can expect it to take around 2-4 weeks between completing your application and getting a final loan decision. Here are the general steps:

Week 1: Submit loan application and supplemental no credit docs

Week 2: Underwriter reviews file, requests any additional statements

Week 3: Underwriter approves loan and issues loan commitment letter

Week 4: Final loan approval after appraisal, title, etc.

Week 5: Sign loan closing documents and funding

Having an organized loan file with all required income and asset documents upfront helps speed things along. Be responsive to your loan officer’s requests throughout the process.

Though it takes a bit more time on the front end, manual underwriting provides a fair mortgage review for all borrowers. If you lead a debt-free lifestyle, homeownership can still be within your reach. Connect with lenders familiar with no credit mortgages to discuss your options.