Mortgage Pre-Approval Questions

Non-traditional credit history is referring to the fact that you don't really have much credit history (2 cards less than 1 year old, assuming not much auto loans/personal loans on file, etc), so they want to ask you all sorts of stupid crap about your renting history and all sorts of other things in an attempt to adequately gauge your credit-worthiness without having a decently padded credit report. It won't be fun. But neither is the rest of getting a mortgage. But don't worry, all this stuff will be over in a few weeks (trust me it's a lot of paperwork).

You can google non-traditional credit history and kind of get a feel for it, but they'll really just try to figure out by any means possible what kind of person you are in regard to handling finances (usually it's easy with traditional credit history - car loans, credit cars, years of payments, etc... if you're new to credit it's hard, so they'll want old landlord phone numbers, cell phone bills, things like that).

In terms of downpayment, he said "you may need 25% down" but that sounds a bit crazy. He might be going off the assumption that they won't be able to verify your credit and your Transunion/Equifax/Experian credit reports are showing you in the low 600s due to a really thin credit history.

You should definitely get in touch with other banks, ask them about the difference between conventional and FHA loans, ask them about preapproval, explain to them how long you've had your credit cards, etc, try to actually sit down with someone and get some face time with them so they can explain it all to you and try to help you get a loan (sometimes it is tough getting your foot in the door with a thin credit history and maybe this 25% down payment guy is giving you the not-quite-polite "you can't afford this/you aren't worth my time" response or maybe it's a "take it at face value, but it says your credit score is 600, we might need to be really really strict about getting you a mortgage", a second bank might be a lot better to work with!)

Also, pull your own credit score, Fair Credit Reporting act requires Experian, Transunion, and Equifax to offer you a free copy of your credit report once a year, it's always good to check that out firsthand, it might give you some insight into why the 1st loan officer gave you that response.

GL on getting the mortgage, hopefully they can pull together a decent idea of your credit-worthiness and get you a decent mortgage with not that much down!

/r/personalfinance Thread