Were you on periodic unemployment during the down times last year? If so, that is perfect documentation to explain the lower income in 2010, and will go a long ways to getting 2010's employment income extrapolated over the time you worked (so if you made $49k over 8 months, it'd really be $73.5k for the year).
You said you made $65-68k/year in a normal year (before last year when it was bad), but you are now on track to make $90k this year... why are you on track to make nearly 50% more than you did in years past? Pay increase? Lots of OT?
Are your medical collections the only negative items on your credit report? Or are there late payments, non-medical collections, etc.?
What were you eventually planning on doing with the medical collections? If you were planning on paying them, read http://whychat.5u.com/hipltr.html before you do. Medical collections aren't a big issue when it comes to qualifying for a mortgage however... but keep in mind that medical collection agencies can mess with your credit by illegally randomly "updating" the date of last activity (DOLA it the common acronym) in an effort to get you to pay them (the worse they are hurting your scores, the more likely you are to pay them... so they think). Perhaps they already have, as 615'ish scores usually indicate negative marks within the past 24 months.
Getting your credit card to report as a $0 balance before lenders check it (this means paying it off and not using it for ~30 days) will give you a credit score boost, the higher that utilization % is right now the more paying it off will increase your scores.
How long have you had the credit card and 2 car loans for? If they haven't been very long, then you may not have a lot of "good" credit to offset the balance on the revolving credit card + the medical collections from 4-5 years ago.
A FICO score between 600 and 640 is considered fair to good credit. But keep in mind, this range of credit scores does not guarantee you will qualify for a mortgage, and if you do qualify, it wonâ€™t get you the lowest interest rate possible. Still, to buy a home aim for a score of at least 640, recognizing that other factors weigh in the decision and that some banks may require a higher score.
What credit score do you need to get a low rate mortgage?
It use to be that a score of about 720 would yield the lowest mortgage rates available. Today, the best rates kick in with a FICO score of 760. And interest rates go up significantly as your credit score drops. To give you an idea, the following table shows current rates by credit score and calculates a monthly principal and interest payment based on a $300,000 loan:
It's awesome that you are asking questions and not just going out and looking at homes before you
know the above things.
Once you speak to Rick Tilton, he can determine the best program for you and give you a price range, then we are ready to find your new home.
You can reach Rick Tilton with Prime Lending at 425.418.5954. He is an expert and I've worked with him for many years.
I look forward to hearing back from you!
Please see my blog for a full list if tips and advice on getting a mortgage
I work as an educator for the WA State Housing Financing Commission and there is a great first time home buyer program which offers down payment assistance and would allow you (if you qualify) for a zero down program. Patrick can share with you if you can qualify for this program, or at least get you on track quickly to be in a position to purchase. He has a GREAT credit repair company that he can refer as well to assist with the $10k in debt.
I refer him often and trust him completely.....but I think chatting with a licensed mortgage broker is the best place to start.
Your income will be averaged over the past 2 years or more to establish your debt to income, so your down year will lower what you may qualify for over your current good one.
Your score may allow you to get an FHA loan. Wells Fargo is currently offering FHA for even lower scores than yours, assuming the rest of the file makes sense.
You may want to do some credit repair, paying down any credit card balance to 1/3 of the limit and disputing any derogatory information for starters. There are programs which can do this quickly for a fee.