References Required for Manual Underwriting

When a borrower does not have a traditional credit score and the loan must be manually underwritten, lenders generally require a more robust payment history than automated systems. Under Fannie Mae guidelines, you must typically provide a minimum of four nontraditional credit references for each borrower without a credit score. If the loan involves a HomeReady mortgage, this requirement may be reduced to three references. Similarly, Freddie Mac requires at least four noncredit payment references if traditional tradelines are insufficient. These references are essential for the lender to assess your willingness to repay debt in the absence of a standardized FICO score.

A housing payment history is considered the most predictive indicator of future mortgage performance, so it is highly prioritized. For manually underwritten loans, if you do not have a credit score, at least one of your provided references should be a housing payment, such as rent paid to a landlord. If you cannot document a housing payment history—for instance, if you live rent-free with family—Fannie Mae guidelines may still allow the loan but impose stricter requirements. Specifically, you would typically need to verify a minimum of 12 months of financial reserves (liquid assets) to compensate for the missing payment history.

If you lack a traditional credit report, lenders look for other recurring financial obligations to build a credit profile. The most common acceptable references, aside from housing, include utility bills (electricity, gas, water), telephone and internet services, and insurance payments (medical, auto, life, or renter’s insurance) that are not payroll deducted. Lenders may also accept records of payments for school tuition, childcare, or even personal loans from individuals, provided the repayment terms are documented in writing. Regular contributions to savings accounts or stock purchase plans can also serve as references if they show a consistent increasing balance over 12 months.

For manually underwritten loans, credit accounts where you are merely an “authorized user” generally cannot be used to satisfy the credit reference requirement or establish a credit score. Lenders often exclude these tradelines because they reflect the primary account holder’s payment behavior rather than yours. However, an exception exists if you can document that you have been the sole payer of the bill for the most recent 12 months. In this case, you must provide written evidence, such as canceled checks or bank statements, proving you made the payments, which allows the lender to assess your specific payment history.

To use rent as a valid credit reference, you must provide independent, third-party verification. Lenders typically require canceled checks, bank statements, or money order copies that clearly show the payee and the amount for the most recent consecutive 12-month period. A direct verification from a professional management company is also acceptable. However, vague statements from a landlord such as “paid as agreed” or “currently up to date” are insufficient on their own. The documentation must detail the specific payment history, verifying that payments were made consistently and on time over the required period.

Yes, for foreign borrowers or non-U.S. citizens who lack sufficient credit references within the United States, lenders may accept credit references from foreign countries to satisfy manual underwriting requirements. These references must meet the same standards as domestic references, meaning they must document a consistent history of periodic payments for the most recent 12 months. The documentation provided must be clear, and if the original documents are not in English, the lender will typically require a complete and accurate translation to verify that the credit history meets the necessary underwriting criteria for the mortgage loan.

For manually underwritten loans using nontraditional credit, the performance standards are strict. Generally, there can be no delinquency on housing payments within the past 12 months—rent must have been paid on time. For all other nontraditional credit references, such as utilities or insurance, the guidelines typically allow for only one account to have had a delinquency of 30 days within the last year. Furthermore, the borrower’s history must usually be free of major derogatory events, meaning no collections (excluding medical) or judgments should have been filed in the past 24 months to ensure the borrower represents an acceptable risk.

No, if your utility costs are included in your rental payment, they cannot be counted as a separate nontraditional credit reference. The goal of obtaining multiple references is to see a pattern of meeting various financial obligations. If the utilities are part of the rent, they are already captured under the housing payment reference. To use utilities as distinct references, you must be the party responsible for the bill and must make payments directly to the utility provider, creating a separate trade line that the lender can independently verify for payment timeliness.

For manually underwritten loans relying on nontraditional credit, the lender requires a history covering the most recent consecutive 12-month period. It is critical that this history be current; older payment records that do not extend to the present are generally not sufficient. The documentation must show that you have met your financial obligations consistently up to the date of the loan application. This 12-month standard applies to housing payments, utilities, insurance premiums, and other acceptable references to demonstrate stability and willingness to repay debt over a sustained period.

Yes, wire remittance statements can serve as an acceptable nontraditional credit reference. This is often useful for borrowers who regularly send funds to family members abroad or meet other financial obligations via wire transfer. To qualify, the statements must demonstrate a consistent amount of funds being remitted over the most recent consecutive 12-month period. This consistency helps establish a pattern of financial discipline and cash flow management similar to paying a recurring bill. As with other references, the documentation must clearly show the dates and amounts to verify that the obligation was met regularly.