Trying to get into your first home but worried about your credit history as a lifelong renter? Here’s some great news!

For first-time homebuyers

The program is designed to target first-time homebuyers who need a little help qualifying for a mortgage due to having very little credit history. So, to have your rent payments included in your credit risk assessment you must be in the process of purchasing your first home. The home you plan to purchase with your mortgage must also be your future primary residence.

Additional qualifications and requirements

In addition to being a first-time homebuyer purchasing a primary residence, borrowers must also:

• Have rented for at least 12 consecutive months
• Pay a minimum of $300 per month in rent
• Have a credit score

Your lender will also need to obtain a 12-month Verification of Asset (VOA) report from an authorized vendor.

What is a VOA report?

A VOA report is a document that provides insight to a borrower’s financial transaction data, which includes the inflow and outflow of funds into bank accounts, investment accounts and more. Lenders use a VOA report to determine a buyer’s ability to make their mortgage payment every month. A 12-month VOA report means that all financial data from the past 12 months must be included for Fannie Mae to recognize rental payment in their approval process.

Proving on-time rent payments

In some cases, borrowers must allow Fannie Mae to have access to view account data for rent payment portals including PayPal or Venmo. The reason is because unlike lenders that automatically report mortgage payments to the three major credit bureaus, landlords do not send rent payment data to these agencies.

Helping to increase home ownership

Fannie Mae’s decision to include a potential borrower’s rent history as part of qualifying for a mortgage will make it possible for more Americans to purchase a home. Numbers from Fannie Mae indicate that nearly 20% of first-time buyers who were denied a mortgage in the past would have qualified under the new system.

To learn more about this change and your eligibility, contact your mortgage broker at Lenderment today.

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