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FHA loan with NSF in bank statements??

Am preapproved for an FHA loan, 5% down, have plenty in the bank for closing costs plus 3 or 4 months reserves. No credit card debt (though I have open cards, going back 19 years), just car loan and student loans. Credit score not great -- 630 -- because of late payments a year ago. Income high, debt to income levels fine; back end debt ratio will be 36%. HOWEVER. While I was switching bank accounts last month, I messed up and I have a couple of NSFs on my account. Just didn't handle the switch-over well, plus paid some unexpected (and large) medical bills for my kids during that time frame.

I'm hoping my income, plus the reserves, plus the debt ratio, will overcome the NSFs but I am horribly nervous and, frankly, embarrassed. Is it likely to sink the loan? 
  • November 05 2010 - Boston
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Answers (10)

my kids did a lease purchase on a home they put 15,000 down and been paying 1033.00 a month they make 34,000 a year together my daughter has a fico score of 750 my son is 650  they had automatic ach debts come out for insurance it came out the day before there direct deposits went in the bank it show 7 times bad in the bank but it was paid by the bank and they was charged each time the bank claimed it was a timing thing they wrote letters to the lender to explain what happen but they declined it does that mean they don't get the loan plus the kids been in house for 15 months someone i am begging for help please email me at [email removed by moderator] need urgent help Tammy
  • March 07 2012
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Talk to your mortgage agent and be sure they know up front. Don't leave it for a surprise. A letter of explanation should be ok
  • November 08 2010
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A letter of explanation should be sufficient given all the other compensating factors.  How old is the credit report with the 630 middle score?  Sounds like with some more time passed between a new report and the last reported late pay, your score will likely have improved. Perhaps your Lender can run a "Credit What-if Simulator" report to see how your score can be improved before you run the next report.
  • November 06 2010
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Pat,
I agree that answers on Zillow from real estate agents about mortgage questions "won't give you the information you need".
  • November 06 2010
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Ask your loan officer if a VOD will work instead of giving up statements. If the money you need for down payment and/or reserves was already in your acct prior to 60 days, then a Verification of Deposit should work just fine. 
  • November 06 2010
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Profile picture for jjlen
@Pat, obviously I will go back to the lender -- I have to in order to finish the loan process anyway! I was simply hoping for some perspectives before I do, so that I can be prepared.

@ others -- if I need to, I will wait a month (the NSF was last month, so one more month would clear it up) but I'd rather not, as I have a house we're trying to get now. But I will explain to the LO, write a letter of explanation if needed, and see if it works out. If not, I guess I'll try again in a month. Thanks for the insight!
  • November 06 2010
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Opening a new account and waiting 2 months....why not just wait 2 months?   Although I don't see why a letter of explanation would not suffice.

@Pat - I could not disagree with you more!  Consumers have free acess to some of the best Loan Officers I have ever met.  I have been in the business for 20 years and I have learned a thing or two from some of the regulars. 
  • November 06 2010
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Consider opening up a new checking account and waiting two months but an underwriter is the only one that can make a decision if it is a problem or not if you submit that checking account for review.
  • November 06 2010
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This should not be a problem for you but you may have to write a "Letter of Explanation" for these NSF's. I've seen this done before. It sounds like you are still a good candidate even with a 630 FICO score.
  • November 05 2010
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You need to go back to the lender which gave you the pre-approval ASAP to determine your fate.  Answers on Zillow won't give you the information you need.
  • November 05 2010
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