Financing in Minneapolis>Question Details

M., Home Buyer in Sparks, NV

Would we qualify for FHA-insured loan?

Asked by M., Sparks, NV Mon Feb 1, 2010

We only have enough money for a 5% downpayment and would like to apply for an FHA loan but our current loan debt might preclude us from qualifying. My husband is currently a medical resident and has about $30,000 in medical school debt. That is our only debt but it is a lot, and we are currently paying the minimum. We cannot put it into forbearance or deferment at this point. Should we bother applying for the FHA loan or will be rejected due to this debt?

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Hi M,

The $30,000 would not preclude you from getting a mortgage, in and of itself. The monthly payment is what is looked at, in relation to your gross monthly income...called debt-to-income ratio. Take a moment to get approved. It is painless, complimentary and then you will have all the information needed to make a decision on home ownership. You may be pleasantly surprised! :) Best wishes.
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1 vote Thank Flag Link Mon Feb 1, 2010
To answer your question regarding the debt service would require that I be able to review your income, the amount of home you want to purchase, and the amount of your monthly payments on all of your loans. I would encourage you to make application on my web site so I can do a proper analysis.

I will say this though, FHA is right now the most flexible lending source when it comes to debt-to-income ratios. I am seeing files where the debt-to-income ratios (new mortgage payment + all monthly debt payments /gross monthly qualifying income) are getting approved at 55-56% on FHA where conventional lenders limit us to 41-45%.

Peter Boyle
0 votes Thank Flag Link Wed Feb 24, 2010
and the second question is, Would the property you want qualify for FHA financing?
0 votes Thank Flag Link Wed Feb 10, 2010
I dont think its a bad idea to go ahead go through the process with a loan officer to see if you do qualify, if you do get turned down at least you would know exactly why and could work on it.
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0 votes Thank Flag Link Sun Feb 7, 2010
Get pre-approved; as a loan consultant, I am able to pre-shop your possible loan options for you before you find a home, as long as we know what price range, type of home and the $amount of your down payment. Each of these real estate agents is correct; and most agents love to work with pre-qualified buyers because we all know they are ready to buy when the right home for them appears. Liz, 612-986-4105
0 votes Thank Flag Link Mon Feb 1, 2010
Hi M. ,

you need to contact a Mortgage Consultant. The regular paperwork will be, last 2 years income tax returns, your current debt. and your last 4 paystubs.

Go ahead and apply, Credit report will be pull.

Good luck.

0 votes Thank Flag Link Mon Feb 1, 2010
Hello M,

During the course of helping buyers out, student debt always seems to be prior to looking at a house. I would recommend speaking with a qualified loan consultant who will help you determine if you are qualified to move forward and purchase a home. I'm not sure if you are local to Minneapolis, or looking to relocate, but let me know if you would like the name of a local professional. She goes above and beyond the call of duty for her clients.…
0 votes Thank Flag Link Mon Feb 1, 2010
Hi M.,
We've worked with plenty of folks who have qualified while residents.

I'd be glad to speak on the phone or privately via email to get the details. If you know the monthly amounts of those payments, we could definitely walk through the numbers. In that conversation, you'd know if the debts will preclude using an FHA loan.

On any FHA v. Conventional loan comparison, the other big detail is credit score. The conventional mortgage insurance can get very expensive at even a 699 credit score and it can often be easier to qualify and less expensive with FHA. We are a national lender that focuses on 30 Year Fixed loans, both FHA and conventional. I ran a comparison at 700 FICO a few months back…

Be glad to help,
Chris Richter
0 votes Thank Flag Link Mon Feb 1, 2010
M, yes a mortgage broker would give you a more in depth picture of how this works. Good thing about student debt it that it is considered secured debt and is viewed differently than unsecured debt in the eyes of the credit bureaus and banks. Are you looking to buy something here in MN?
0 votes Thank Flag Link Mon Feb 1, 2010
Debt is only part of the equation. You should contact a mortgage broker in your area to find out if you will qualify.
0 votes Thank Flag Link Mon Feb 1, 2010
M., you will get a more specific answer is you speak directly with a mortgage broker than what anyone can tell you in this forum. A broker will look at all your financial info and let you know where you stand. If you are not working with one already, I can give you the names of some excellent ones.
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0 votes Thank Flag Link Mon Feb 1, 2010
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