Financing in Seattle>Question Details

lorrietsmith, Home Buyer in Seattle, WA

Can I get an FHA loan for new construction loan in planned development. Price $400,000 and my income is $400,000 per year. Poor credit all debt paid.

Asked by lorrietsmith, Seattle, WA Thu Nov 29, 2012

Had a foreclosure in 2008 and have worked since then to pay off all debt. Still have poor credit due to various old bills popping up on credit report. We have paid them all. Other than our car payments we do not have any debt and have income of over $400,000. The builder (MainVue) says the home will take 6 months to build.

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Most builders have a preferred lender. Make an appointment with that lender if you are really interested in that development. Sit down with them, have them pull your credit and he/she can tell you exactly what needs to happen over the next six months. Most builders want a non-refundable deposit before they will start construction for you.
1 vote Thank Flag Link Thu Nov 29, 2012
Lorrie,
Most of the information below is accurate, but not all. with FHA you cannot have late payments within the last year. Other then that you will be good to go. You want to meet with a lender right away & have them take a look at your credit reports from all 3 bureaus. Also, even if you buy new construction, you want to hire your own buyers agent to reprresent you because they will take better care of you & get you more free extras then will the builders agents. I am both a real estate broker & a loan officer & if you want one experience person to take care of everything for you, then feel free to give me a call & interview me.

Good luck to you in any case,
Jirius Isaac
Isaac Real Estate Team
Champions Real Estate Services
TriStar Finance #MLO-107799
Office: 425-483-6849 Cell: 206-841-9976
Winner of Seattle Magazines 5 Star
Real Estate Agent Best in Client Satisfaction Award
Mortgage Loan Originator Best in Client Satisfaction
0 votes Thank Flag Link Thu Nov 29, 2012
You shouldn't need a construction loan, and I think you are merely indicating that the loan is to purchase new construction? Your foreclosure history is 'aged' and that shouldn't pose a problem. The lingering bad credit reporting is another matter. You'll need a competent mortgage professional to help you navigate the credit history issues. Bad credit reporting can be overcome. Your income is strong, so I don't see why you wouldn't be able to qualify for an FHA mortgage. (Besides, FHA mortgages were designed for borrowers with less-than-perfect credit.)

If it turns out that you need a construction loan, try Washington Federal Savings. They offer custom construction loans. Good luck!
0 votes Thank Flag Link Thu Nov 29, 2012
Thanks Ray! Yes it is a new construction home in a planned development. The only debt we have is our car payments, those are reporting all on time. Is there anyone you recommend? I really do not want to have my credit pulled more than once. I don't want to have it look like I am being denied all over town.
Flag Thu Nov 29, 2012
Hi Lorrie, the FHA requires a 3 years between a new applcation and the completion date of the foreclosure. The FHA does not currently have a true construction loan, the do have a rehab (203K) loan for homes that are already built. You will need to have rebuilt your credit with scores above 700 to qualify for a conventional all in one construction loan. However, the wait period for conventional loans after a foreclosure is 7 years. The minimum qualifying score is 620 for an FHA, but you would need to look at homes that are already built.

Hope this is helpful!

Jon Bruch
HomeStreet Bank
NMLS#115719
0 votes Thank Flag Link Thu Nov 29, 2012
FHA just requires 3-years from a foreclosure, so you would appear to meet that time requirement. However after a major derogatory event like a foreclosure, you need to have clean credit. If there were new collections, charge-offs, etc. still popping up after the foreclosure, even if they were from debts that defaulted before the foreclosure, it doesn't matter as the negatives are still considered from the time they occurred. Safe bet is that you'll need to wait 3 years from the most recent negative mark on credit since you have the foreclosure on your record. You also need to have 12-months of re-established (meaning on time) credit as well, preferably with 3 trade lines (items that report to your credit report). You having paid the derogatory items that came up definitely helps though, and puts you in a better position than if you had not paid them.

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes Thank Flag Link Thu Nov 29, 2012
Thanks Kalen,

Regarding the income, is there a income cap you are allowed to make? I was hoping our low debt to income ration would help our situation.
0 votes Thank Flag Link Thu Nov 29, 2012
Thanks Shane!
Flag Thu Nov 29, 2012
FHA has no maximum income amount, only loan amount limits.
Flag Thu Nov 29, 2012
Hi Lorriet

I agree with Kalen. You'll likely have to wait longer but I would reach out to Eileen Burke at Cobalt Mortgage. She's a pro and can assist you. You can find her on the web if you google her name.
0 votes Thank Flag Link Thu Nov 29, 2012
Thank you!
Flag Thu Nov 29, 2012
Hi Lorrie. You may have to wait a bit longer due to the foreclosure. Typically 5-7 years depending on circumstances. You'll want to talk to a direct lender like Cobalt Mortgage (I can send you a great contact) who can avoid the typical overlays by selling directly to Fannie Mae. Regarding FHA, you may want to check on your income as well. Whether it's a brand new house in a planned community has no impact on whether or not you can obtain financing unless it was a townhome/condo community with an HOA.

At the end of the day, you'll want to talk to a great lender. Let me know if I can help you any further.

Thanks!
0 votes Thank Flag Link Thu Nov 29, 2012
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