Do I have to provide cancelled rent checks if I’m a first time home buyer?

This question comes up quite often — and surprisingly is a make-or-break factor for a borrower when looking to get approved for a mortgage loan.

When it comes to first time home buyers borrowers applying for conventional loans, the answer is typically no. This is because these borrowers have shown a strong enough credit profile to qualify for conventional financing and therefore don’t have to jump through as many hoops.

Unconventional loans, however, are a bit more stringent. If you’re a first time home buyer applying for unconventional financing who has been paying rent for the last few years, you’ll want to have some proof of those rent payments to show to underwriters. This is why it’s not recommended you pay your rent with cash or money orders.

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If you’ve been living at home for the past several years without paying rent, and you want to qualify for an unconventional mortgage, you’ll likely have a much harder time getting approved — especially if you have no money in savings and poor credit.

Ultimately, the requirements depend upon the mortgage product. See below:

• Fannie Mae (Conventional): You are typically not required to provide cancelled rent checks for approval, however it is up to the underwriter. If you’ve been living at home and not paying rent, a rent free letter from parents may be required.
• Freddie Mac (Conventional): You are typically not required to provide cancelled rent checks for approval, however it is up to the underwriter. If you’ve been living at home and not paying rent, a rent free letter from parents may be required.
• FHA: You are typically not required to provide cancelled rent checks for approval if your score is 640 or greater and you have established a good savings pattern, however it is up to the underwriter. If your score is less than 640 and you don’t have a good savings pattern established, then you will most likely be required to show 12-months of cancelled rent checks.
• USDA: You are typically not required to provide cancelled rent checks for approval if your score is 640 or greater and you have established a good savings pattern, however it is up to the underwriter. If your score is less than 640 and you don’t have a good savings pattern established, then you will most likely be required to show 12-months of cancelled rent checks.
• VA: You are typically not required to provide cancelled rent checks for approval if your score is 640 or greater and you have established a good savings pattern, however it is up to the underwriter. If your score is less than 640 and you don’t have a good savings pattern established, then you will most likely be required to show 12-months of cancelled rent checks.

To learn more about specific mortgage requirements, be sure to speak with an experienced mortgage broker.