Home Buying in Atlanta>Question Details

Amber Bryant, Home Buyer in Gwinnett County, GA

What's the reality of purchasing with poor credit but decent income?

Asked by Amber Bryant, Gwinnett County, GA Wed Oct 9, 2013

My husband and I don't have very good credit but are actively working towards cleaning it up. We are looking to purchase within the next 12months, the sooner the better because we currently pay $22k a year in rent. Our salaries are decent; $120k but as I said before, our credit is lacking. My FICO is 558 and his is 570. In reatlity, is it possible for us to purchase in our current state? Also, the only debt that we pay is $250 monthly for both our student loans and one car payment.

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Hi Amber,
For an FHA mortgage, most lenders require a 640+ credit score since 2008/2009.

Prospect Mortgage is one of the few direct lenders to offer an FHA 580-639 FICO loan program. Credit profile is a major factor in a mortgage approval. Generally, there should be no late payments, new collections accounts/charge-offs/liens/judgments in the last 12 months. It is required that all open collection accounts must be paid in full if their cumulative balances exceed $1,000.

The 3.5% minimum down payment can be from the borrowers own funds or it can be gifted from a family member. Two months of reserves for the PITI (Principal + Interest + Taxes + Insurance) payment + HOA Dues will be required. This must be from the borrower’s own funds and not a gift. FHA loans will allow a seller contribution toward closing costs/pre-paids of up to 6% of the sales price.

To begin improving your credit score, you would need to contact each of your creditors directly to see what your options are. Paying off derogatory debt will help improve your credit score in the long run, but not immediately.

With collection accounts, most of the damage is done when they are initially placed on your credit report. Some collection companies are now reporting you are late each month the debt goes unpaid. This continues to drag on many people’s credit scores each month until the debt is paid in full. Until you do that, your credit score has little chance of improving.

In exchange for paying the collection account in full, you can try to negotiate to have them completely remove the derogatory item once the payment is received. Some collection agencies will do this, while others will not. You will just have to ask each one and see. If they will not remove it, just having it paid and closed will help in the long run.

All liens and judgments will also need to be paid in full. These impact the title position of a mortgage so they must be satisfied.

It is very important that you be VERY careful in disputing accounts. You cannot dispute accounts which you know to be accurate. For a mortgage, you cannot have an active and open account that has a disputed status. Fannie Mae/Freddie Mac/HUD all have very specific guidelines to be followed when a borrower has an account in a disputed status. In some cases, it could cause you not to be able to qualify.

To build positive credit, you typically need to have 2-3 trade lines reporting for 12-24 months. There should be no late payments or other derogatory items reported in the last 12-24 months. On your Revolving credit accounts, your outstanding balance on your monthly statement should not exceed 30% of the credit limit.

If you are looking to purchase a property, working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your mortgage options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com to get started.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203(k) Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
2 votes Thank Flag Link Thu Oct 10, 2013
Fixing your credit is a long term goal and you should be working towards it now. As far as buying a house, the more money you can put down the better chance you have. If you could move to a cheaper rental and save that money then some, you'd be in good shape.

If you'd like I can put you in touch with the lender in my office to get you on track and when you're ready we can start looking at homes.
1 vote Thank Flag Link Thu Oct 10, 2013
Your credit scores are a bit low and may take some work to fix but you're not too far off. For example, I have been able to give out loans with scores as low as 580. So if you can boost yourself up to this range or above you will have a better shot. But as of now, I recommend you work on your credit. The simplest way to fix your credit is to pay off your debt and revolving credit balance on time. There are also other important factors to consider when applying for a loan. These factors include your assets, liabilities, debt, employment, and down payment. These also have to be in line in order to get a good loan. Well I hope this helps! If you have any other questions or if you would like a loan, feel free to contact me. Good Luck! Brian Nguyen Sr. Mortgage Banker NMLS # 659743 Phone: 949.667.2887 brian.nguyen@nafinc.com
0 votes Thank Flag Link Fri Feb 14, 2014
Hi work to clean up your credit. Doubtful you will get a loan at the current scores and if you did the interest rate would be very high. Call me with questions. 404-372-7335
0 votes Thank Flag Link Fri Oct 11, 2013
It will be difficult to purcher with your current credit scores even with a good income. If someone did do a loan the rate would be huge because of the credit scores. Work on cleaning up your credit. That is first and foremost. Call me with questions 404-372-7335
0 votes Thank Flag Link Fri Oct 11, 2013




678-691-4344 OFFICE
678-949-3102 CELL
0 votes Thank Flag Link Fri Oct 11, 2013
Amber ....looks like you are on the right path towards home ownership. Your best bet is to talk with a lender who has the ability to give you solid advice in getting your scores up to par. This will give you an exact plan and a timeframe for you to purchase a home. Rodney should be able to help you. Additionally I have some local lenders here in Gwinnett County that can help too. If you would like their names and numbers let me know and we can get the ball rolling.

Best Regards,

Chuck Green, Realtor
Keller Williams Realty
678-578-2788 (o)
770-714-7077 (c)
Web Reference: http://chuckgreen.com
0 votes Thank Flag Link Thu Oct 10, 2013
Please give me a call if you are looking for a great lender. 810-335-3503. Or you can send me an email at wallen@proficiomortgage.com and I can send you an inquiry form to get your paperwork started and try to get you pre qualified. We have certified credit counselor a who will work with you

William Allen
Mortgage Banker
0 votes Thank Flag Link Thu Oct 10, 2013
You probably shouldn’t even if you find a lender that says it is possible. You mention you are cleaning it up, that implies some accounts that haven’t been paid as agreed. If you have collections the best plan would be to take care of those before taking on more debt. Buying a home could trigger aggressive behavior by creditors from your past, it is a signal you now have money and aren’t paying them.

Also, be careful about “cleaning up” I linked some info below, hope it is helpful, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
0 votes Thank Flag Link Thu Oct 10, 2013
Thank you. When I say "Clean Up" I mean that as in negotiating what is known to be owed and paying that off as well as disputing the few items that are known not to be owed. I'm hoping that our scores will increase with every item paid off. How long does it take for credit scores to update once an item has been paid?
Flag Sun Oct 20, 2013
Hi Amber,

I agree with Tiffany you need to speak with a lender who can assist you with which debts you need to clear up and how each debt will affect your credit score. I know a couple of lenders who can assist with that. Please feel free to give me a call if you need the names and numbers for a couple of them.

Ava Anderson
Solid Source Realty Inc
Associate Broker
770 369-5121
0 votes Thank Flag Link Thu Oct 10, 2013
Hi Amber, it is possible to look over you and your husband's credit to assess the areas that can get your scores up to at least 620 with fewer headaches. I have had many clients go from credit scores lower than you two and up to 640-760 in a year. It is definitely possible!

Let's discuss in further detail how we can come up with a game plan possibly sooner than 12 months if at all possible.

Tiffany Hankerson
Associate Broker
Drake Realty
404-433-4184 Direct
770-565-2044 Office
866-260-7180 Fax
0 votes Thank Flag Link Thu Oct 10, 2013
Hello Ms. Bryant, Thank You for your inquiry and interest in purchasing a home. You would actually be best served by talking to a lender. I work with several if you will email, text and/or phone me, I'd
be pleased to provide their contact information. I am confident they can answer your questions and offer suggestions for your home purchase.

My contact information:

C-Text/404 234 9418
Email: beppyswalton@gmail.com

I look forward to hearing from you and to assisting you and your husband.


Elizabeth Walton, Realtor
Keller Williams Realty
0 votes Thank Flag Link Wed Oct 9, 2013
Contact a lender that does business in your area to find out what their minimum FICO scores are. You may need to bring up your scores a little more first....
0 votes Thank Flag Link Wed Oct 9, 2013
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