Top Four Reasons for Rejected Files

#1 Derogatory Credit: 
Rural Development Loans Require excellent credit
with no more than one slow pay of 3-days late.

#2 INSTABIILITY OF INCOME:

Frequent job changes in the last 2 years.
Recent changes in careers

#3 RATIOS EXCEEDING GUIDELINES:
Insuffcient income
Excessive Debt

#4 LIQUID ASSETS:
Documenting acceptable funds for closing.

DEROGATORY CREDIT
Items considered when reviewing a credit report:
Derogatory credit within the last 12-24 months.
Collection accounts paid off to qualify
Poor credit in past without re-establishing new credit.
Derogatory credit after a banruptcy needs to be discharged 3 years.
Judgment must be paid in full, including any tax liens.
No credit history requires rent verifications and utility bills to establish credit.
Remember that a co-signer does not off-set bad credit.

RATIOS THAT EXCEED THE GUIDELINES
Insufficient income may cause ratios to exceed the guidelines.

Insufficient Income:
Full-time does not always mean 40 hours per week
Unreinbursed business expenses will cause income to be less (on any sales or commissioned employee you should plan on checking for business expenses on their tax returns)
Rental income is almost always showing a break or even or loss on tax returns.  (Guidelines require tax returns to be provided on anyone with rental property)  Therefore, if a buyer tells you they get $600.00 per month in rental income - REMEMBER that this is probably before deductions of their own payment on the home and wriring off the maintenance.  In some cases, the payment can be washed out by the rental income.
Child support received or Note income must be verifiable and last at least the next three (3) years.

INSTABILITY OF INCOME:
ITEMS CONSIDERED WHEN REVIEWING EMPLOYMENT
Three or more job changes in a two year time frame thows a red flag unless the purchaser is a union worker or in the carpentry field.  Fields of employment must be related and the change must be for the better.
Seasonal or temporary employment of job stability.  Seasonal workers' income must be averaged.
Part-time income, bonuses and overtime must be verifiable over the past two years.
Never go off W-2 income for qualifiying: some of the W-3 income may not be able to be counted and/or borrower may make more money now.
A change in careers may require a year on the job for Rural Development type loans
Self-employed or commissioned employees must have beenin the same line of work for at least one full year if the job relates to the previous job or have two years tax returns.
If borrower has new job with probation period, loans can be approved BUT not closed until probation period has expired (i.e., including but not limited to state or federal employment)