federal student loan
Question
Qualifying for a mortgage loan?
Qualifying for a mortgage loan? My fiance and I would really like to purchase a home in the next few months (preferably before December 1st to get the first-time buyer rebate), but I need to know what our options are. Currently my credit score is 650, but is rising slightly every month. The only debt I have is federal student loans (about $8500), which I pay on time and more than minimum every month. My car is paid off, I have no CC debt, etc. I also don't have any open accounts other than the student loans, so my credit to debt ratio is bad. My fiance went through a divorce and his credit is all but destroyed. His score is 559, and I've just begun to start helping him repair it. I'm positive we can raise it in the next few months, but not enough for it to be considered "good." My documented gross income is about $28K (I also have some under the table income, but no way to show this). My fiance's income has taken a big hit this year--on last year's tax return, his gross income was $59K, but as of now, it's looking like he'll finish this year at about $44K. Still a lot more than mine. My credit is better than his, but I don't think there's any way I can be approved for a loan with my lower income. I need his income, but with his horrible score is there any loan we can be approved for? I know we can be approved with a 20% down payment and high interest rates, but we just won't have 20% ready before December 1st. We can for sure have 5%, and perhaps 10%. What are my options?
5 months ago - 4 answers
Best Answer
Chosen by Asker
Your best bet is, as Ryan said, an FHA loan. You have two problems, however. If you have just started repairing your fiance's credit, he may not have a positive enough paying history. While most FHA lenders do not look at credit sores, they do look at the last two years of payment history, and if your fiance's history during that period of time is less than good, you may not qualify (FHA loans are tightening up with the increase in interest rates). The second problem you have is timing. An FHA loan requires 3.5% down, and then add in another 3 to 5% for closing costs, so you will need between 6.5% and 8.5% in the bank when you apply for the loan (not at closing, but when you apply). Working backwards, you will have to close on the house by December 1. Normal time from offer on house to closing is 45 to 60 days, so at the latest, you need to have a house picked out and an offer accepted by October 15 and better by Oct. 1. That gives you a bit over three months to save up the say 7%.
by Steve D
5 months ago
Asker's Rating: 
Other Answers
Apply for an FHA loan. You have good enough credit PLUS the down payment to qualify. There is no reason why you should be turned down based on what you provided.
by Ryan M- 5 months ago
I agree with Ryan. If you have no other outstandng debt other than hat you listed, your FICO scores shouldn't be make or break. Especially if you are able to scrounge and come up with 10%. Good luck!
by D S- 5 months ago
Contact a mortgage broker and explain the sitition with them. It might cost you a few dollars but it's their job to get you the best deal.
by stan c- 5 months ago