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Low credit score - looking to buy house? Info on FHA?

I have a credit score of 667, my husband is 643 - we would have about 10% down payment on a house. Would we even be able to get a loan given the current economic situation?

My husband and I take home approx. $200K combined annually - and have obviously made some irresponsible decisions credit wise in the past - but affording the home and paying the loan would not be a problem.

Im a little familiar with FHA loans (a very little) and I know that people with lower credit scores may be able to get a loan this way but my concern is do we make too much to even qualify for one?

Thanks so much for your help all!

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Also, just want to add that our work history has been pretty stabl - I have had two jobs out of college - one for 5 years and then 4 years My husband also has a solid work history.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:13 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Dani!

Welcome to forums!

With the credit score that you've mentioned, it would be possible for you to get a FHA loan. I would suggest you speak to some of the local FHA lenders and see the type of rates and terms they are offering. It will be easier for them to let you know whether or not they would be able to give you a loan.

You may even seek a no obligation free mortgage quote from the lenders of this community. This will let you know the present terms and rates of the loans available in the market.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Susan, thanks for your reply. What is driving down my score is my history with late payments (no longer....but def in the past) and I hear that FHA loans usually are not given to people that have late payments on credit report.

Also - would the no obligation free mortgagt quote hit my credit report? I cant afford to do anything that could bring down my score!

Thanks again!

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

the only thing that affects your credit score would be an inquiry by a lender. needless to say, anyone with whom you inquire would want to see your credit in order to provide you with a reasonable estimate of what that lender could do for you.

honestly, as long as you keep your mortgage shopping confined to a 14-day or so period, all such inquiries would be considered as one and therefore not have much effect. furthermore, your scores are quite good enough for consideration - most of us require a minimum score of 620.

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jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The credit scores are fine for an FHA mortgage.
A down payment of 10% is very good for an FHA mortgage.
We do not know what purchase price range you are considering, nor do we know what other monthly debts you currently have, nor do we know in what state or county you would be purchasing in.
However, your income is of such an amount that it appears you are qualified for a mortgage over $600,000.
You may not be looking to borrow that much, but, my point is that FHA mortgages have maximum amounts by county in the United States. You may be constrained by the mortgage limit.
If you note what state and county the purchase would be in, we can tell you the maximum FHA mortgage amount. If you then add your 10% down payment to that, that becomes your maximum purchase price for that county.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Great info, thank you! Well we would be looking for approx $400K-$450K if possible - we live MA.
GMakerley- thank you, I did not know that about counting as one score. Very helpful!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Great info, thank you! Well we would be looking for approx $400K-$450K if possible - we live MA.
GMakerley- thank you, I did not know that about counting as one score. Very helpful!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Also - my husband and I both have student loans - about $70K combined for both of us. We also prob owe $25K combined on autos. As Im writing this Im realizing it does not look good for us. :) I think my husband has about $3K cc debt but will be paying that off....that sums up our debt.

Thanks again!

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thats a lot of debt Dani

Your DTI would look really bad, when you go to apply for loan, unless your income can compensate that

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

well, dani, you do have a large amount of debt outstanding, but what is critical is what your monthly obligation is.

if you look at what john said (qualified for about $600K) and the price range you mentioned ($400-450K), that large difference ought to allow you to incorporate your other indebtedness and still give room for approval. i say "should" while not knowing precisely your circumstances.

truly, the monthly payments you have at present are a major factor in any qualification.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks again.
OK, well that's the thing - $50K of the student loans is deferred and I do not have to pay until 5/10. You mention above my "present" monthly obligations - would this help me by any chance?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

OK. sorry to keep asking so many Q's but now you got me thinking.....
My husband has the 643 credit score, prob will take home $140-160K this year - $25K student loans and $12K auto, $3K cc.
Now I'm wondering if it would just be in our benefit that he go at it alone since his DTI would be much better without mine included.
(I'll bring home $70K - $50K student loans $15K auto) Yikes.
We're speaking to a credit union this weekend but would still love your thoughts. Thank you so much for all the info you have provided thus far. So helpful and i feel much more informed on our situation.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

ONE more question I promise!
Does his 401k & stocks play into it also? He has about $100K in 401K and not sure on stocks. Again Im the one bringing us down :) with only $17K in 401K. BUt just wondered if this played into and if it coudl help us.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

last comes first: assets are nice but will not make or break the loan. in this case, lenders will like the numbers. your student loans, unless deferred for at least 12 months, must be included in the debt service. that gives you the option of obtaining a new deferment period or having the monthly debt included in your overall monthly obligations. obviously, that could affect your debt ratios adversely (but i can't say for sure because you didn't indicate your monthly payments).

honestly, you ought to see how they feel about your joint application. if they feel your debt is excessive and would prevent approval, then you can go ahead and make your deal in your husband's name with his income and debt. but don't make that decision until the loan officer actually does some analysis.

one big MAJOR thing: please stop acting like a drag on the transaction. what you've stated about your situation is not negative at all - it may have a slightly adverse effect (not the assets), but it's not like you're pulling down the deal.

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Dani you can look at option to borrow from yoru 401k to pay off the student loan, that cna help you to decrese your debt to incoem ratio

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i wouldn't go that route, sunny...student loan rates can be quite low, and using retirement funds for payoff isn't such a special idea for most people.

just a thought...

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well I was more referign to borrow and pay back to 401K.

If you look at what happned to the 401K's most of them are down by 50% unless you kept it as cash

So inted of apyign some one the itnerest our poster can pay interest to him/her indirectly and also keep thie Debt to Incoem ratio low

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i knew what you meant, actually...but that's a highly individualized decision to make. i simply don't think it's for everyone, so don't often suggest such a thing. i'll happily get into the discussion if a borrower brings it up. otherwise, not being a financial planner, i am loathe to suggest things of that type.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Again, fantastic information. Thanks again for taking the time to answer all my questions. You have been more than helpful!

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Gklad that we were able to answer your questions

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