With that being said, most lenders I know of are not even considering you for an FHA loan if the middle credit score for each borrower is not at least 620. You may have some lenders out there who will consider it if you are a 600 or so, but then you are probably looking at less than favorable terms.
Work on buliding your credit scores. Speak with a credit counselor who can give you tips to manage your finances and boost those scores. Your county or city probably offers those services for free. It might not help you get into a house now, but sure enough if you work hard at it good things will come
Best of luck
Mersiha S.-This is America, do what you like. But run like the plague from anyone who says you can't buy with those scores, but hurry and call now because the $8000 Tax Credit is going away! By the way, it is UP TO $8000. Not every purchaser gets a check for $8000. That's for another topic though.
Granted, you are credit challenged with those scores. Bad things happen to good people, so it's not a judgment by any means.
FHA does not have a "FICO" requirement as alot of lenders will tell you. Sometimes it's because they just don't even realize that. However, the investor (the big guys fronting the money for the loan) have tightened up credit scores they will loan on. FHA does not have income limits, you just have to qualify for the loan. If your scores dipped due to a temporary circumstance, very often, letters of explanation can be provided to explain why it happened and what you have done to ensure you are on solid ground.
Depending on where the home you like is located, it may qualify for a USDA loan. Although in Texas, you surpass the allowable income limit. That is a determination that would have to be made by a local mortgage broker knowledgeable in USDA loans. USDA are government insured loans in rural areas to provide sustainable housing in those areas.
You need to speak with one or several mortgage brokers to determine what you can do.
I hope for great things for you and your family!
You received some great information...now the alternative is a lease option that with an investors help allows you to put a low down payment with an option to purchase a home. This allows you time to repair your credit and have a home that meets your family needs at the same time. It won't get you the stimulus package money but it allows you to buy at a fixed price...todayâ€™s prices with a future close date when your credit allows you to convert to a conventional loan. Hope this give you an alternative to a "NO", based on your current credit situation. By the way there are thousands of people in your situation.
Currently, with scores that low, even with a qualified co-signer, neither you or your wife could be on the mortgage, thereby negating the loan altogether. I'm an experienced loan officer and credit counselor with a MI based direct lender and I have helped many people in your similiar position to ultimately become homebuyers. With the government 8,000 Stimulus pkg going away by the end of November, lets take a look at your overall situation to see if we can get you into your new home in time. my toll free office number is: 800-678-6663 Ext 5154. I look forward to be of further assistance to you both.
A competent loan officer will take all the factors you have mentioned into consideration. As several have indicated here, the FICO score remains a critical part of this equation. If it is not possible to purchase a home, you may also consider leasing a home while you work on resolving any outstanding issues. The Grand Rapids Association of Realtors Â® has recently launched a Rental MLS for homes which can be rented.
If you're interested in learning more about what's available on that database or would like to explore the possibility of a rental option for the home which has caught you eye, let us know. A well presented proposal can sometimes open up new avenues.
The $8,000 HUD tax credit expires year end 2009 http://www.federalhousingtaxcredit.com/2009/index.html
Locate an experience local FHA lender...http://www.hud.gov/ll/code/llslcrit.cfm
Yes, FHA will consider non-occupy borrower (aka co-signer). However, you should know that a co-signer is responsible and has full oblifation of the debt he/she co-signed.
I hope the information helps.
Phone: (888) 525-0125