Verification of Rental History for an FHA Loan

by KC Hernandez ; Updated April 20, 2018
FHA guidelines require lenders to check your rental history.

Accepting the move from renter to owner is a big step not only for you, but for your mortgage lender as well. First-time buyers pose a high risk of default. This stems from their lack of history repaying a large debt such as a mortgage, and covering additional costs of home ownership such as property taxes and insurance. Federal Housing Administration loans, widely used by first-time buyers, require that lenders verify your ability to make on-time housing payments.

Verification of Rent

FHA lenders require an institutional verification of rent form, or VOR, when you rent from a property management company. The property manager completes a VOR which certifies that you live at the residence, the time period you occupied the rental and your payment history over the past 12 months. The landlord may also provide comments about you as a tenant. You, nor your lender or real estate agent, may handle the VOR. The lender sends the form directly to your property manager for completion and it returns the VOR directly to the lender.

Cancelled Checks

Your lender may request copies of cancelled checks for the past 12 months to establish your rental history. Lenders typically request the checks in lieu of a VOR when you rent from an independent landlord, rather than an institutional landlord or property management company. Because the lender can't solely rely on a third-party individual's word regarding your payment history, the FHA relies on cancelled checks to verify the amount and frequency of your rent payments.

No Rental History

You can qualify for an FHA loan without a rental history with automated underwriting approval from the Technology Open to Approved Lenders, also known as the TOTAL Scorecard. FHA's underwriting system may determine up front that your credit scores, income and assets serve as sufficient proof of your ability to repay the loan, allowing you to forgo rental history verification. Without TOTAL approval, the lender may deny the loan outright or manually underwrite your loan. A manual underwrite involves more intensive scrutiny of your credit and finances. It seeks to determine whether compensating factors exist which justify approving your loan despite a lack of rental history. Even when you live rent-free, the lender verifies and documents your housing history through information on your credit report.

Late Payments

Late rent payments, which are 30 days or more past due, can kill your FHA deal. You can explain late rent to the lender, and at its discretion, it may approve your loan despite a flawed rental history. You must provide the lender with documented proof that factors beyond your control – not disregard for your financial obligations or money mismanagement – caused the late payments. For example, a legal dispute between you and the landlord in which you were legally entitled to withhold rent, serious illness or disability or the death of a household wage earner, may qualify as extenuating circumstances which are unlikely to recur or hurt your ability to repay the loan.

Video of the Day

Brought to you by

References

About the Author

K.C. Hernandez has covered real estate topics since 2009. She is a licensed real estate salesperson in San Diego since 2004. Her articles have appeared in community newspapers but her work is mostly online. Hernandez has a Bachelor of Arts in English from UCLA and works as the real estate expert for Demand Media Studios.

Photo Credits

  • Hemera Technologies/AbleStock.com/Getty Images
Cite this Article | raiffeisen-cards.ru A tool to create a citation to reference this article Cite this Article

Related pages


settling a credit card debtamortizing intangible assetsmycard adp com activatebond series eefurniture donation pick up seattleirs schedule k-1capm componentsharley visa cardjoint bank account tax implicationspenalty of withdrawing from 401kscholarships for people who wear glassesvinyl vs aluminum sidingfha spot approvalcondo vs townhouse insurancegrants for biracial studentsassessed value calculatorwhat is reconveyance deedwhat does financial aid deferment meanebt restrictionsalabama form 40nrexponent salaryrequirements for a walmart credit cardhow to calculate the depreciation of a carwhat is the longest mortgage termtrack expenses spreadsheetnegotiate student loan settlementcar lease co signermoney orders vs cashiers checksstale checks in the philippinesdo i have to pay back pell grantdifference between 1099 and 1040ucf scholarshipsteps to withdraw cash from atmcoverdell withdrawalborrow from 401k fidelitynfcu daily atm limitsovereign bank checking accountfeea scholarshiphearing aid dispenser examexpedian credit reportpre approved credit cards definitionamerican express card atmpros and cons of the welfare systemcan unmarried couples file joint tax returnsihop w2irs form 8283section 8 housing eligibility njdss caseworkerdental insurance dmoindiana state tax refund statususps money order expirationwhat is the difference between eft and wire transferis a home equity line of credit a second mortgagegaap journal entriesdcbs local office searchlandlord dies tenant rightsbeneficiary tax ratedoes insurance cover optifast90 day fraud alert transunionhow do i get old w2scraigslist louisvilledisney rewards visahow much does it cost to bond a toothach hold paypalsingle mothers college grantsdental insurance covering implantskentucky state tax return status1099 tax exemptionscraigslist money order scamshmo or ppo dentalhow to calculate receivables turnoverhow to calculate cvpis medicare part d mandatoryconditionally approvedwww.safewayinsurance.comserial number on savings bond