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whatwouldjoshuado · Joined: 18 Jun 2009 Posts: 1 1.96 Dollars($)

this is my first post so please be gentle.

My wife and I where given a verbal "go ahead" from our bank to make an offer on a house that we are interested in. We got an accepted contract for 220,000 with a down payment of 70,000.

Once our application was fully ran we were informed that the loan officer only pulled my tu score (625) when reviewing my preliminary info. After pulling my full report it turns out my median score is 598. He apologized and explained that tu is usually the lowest so they will pull just that one initially. My wifes median score is 592.

He explained that even with such a large down payment our scores would prevent us from qualifing for any of the fha, va, or conventional programs.

The only recent derogs on my report are a couple of recent 30 lates on my 3 cc's which are all at the same time and are due to a close family member losing their battle with cancer and all of the turmoil that is associated with that. Otherwise I have no open loans, I carry very low balances on my cards (10-15%) and no judgments or liens.

I have been working with a mortgage broker who thinks that I may qualify for the USDA rural loan. The subject property qualifies, our income is within the limits, and my debt to income ration is very very low.

I have documented rent payments of 1100 for the last 14 months. I have been at my current job apprx 4 years.

I have perused every corner of the internet trying to find out down payment rules on this type of loan and I cant find any info other than that you dont have to have one.
My question is, Will a down payment of 70 to 80 thousand effect my ability to qualify for this type of loan?

The large down payment is coming from a life insurance policy which can be fully documented.

thank you in advance, and sorry for the long post

jerry · Posted: Fri Jun 19, 2009 6:02 am Post subject:

Hi joshua,

To qualify for an FHA loan, you will need a minimum of 620 down payment. If your median credit scre is 598 and that of your wife is 592, none of you can qualify for an FHA loan. However, if your income, DTI ratio are within the limit and the subject property qualifies, you may get approved for an USDA loan. USDA offers 100% financing. So, you do not have to make any down payment. But in order to avail a good interest rate on the loan, a large down payment will come in handy.

Thanks,

Jerry

brian3 · Joined: 09 Jun 2009 Posts: 80 21.31 Dollars($)

Joshua, sorry to hear about your situation. USDA loans are a bit tricky especially compared to fha loans. For fha loans our underwriter can approve them and move forward but with USDA you need to send the full loan package to them for underwriting. I think you have an excellent chance of the loan being approved if you have the low dti, large down payment etc. Write up a detailed explanation letter to submit with you loan package for your recent credit problems. Also see if there is anything else erroneous on the report of something maybe you can payoff (i know you said you keep your balances low). If I can be of any assistance please ask. good luck

gmakerley · Posted: Fri Jun 19, 2009 9:32 am Post subject:

not 620 down payment but 620 credit score. i'm sure you've both caught this by now.

i think a reasonable underwriter would consider the large down payment as a favorable factor in looking over your file. you'll want to write a nice explanatory letter regarding the late payments you made, to beef up your application.

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