If you're putting 20% down, you should be able to go with a conventional loan.
With FHA, regardless of the down payment, you are required to have mortgage insurance. There's the Upfront Mortgage Insurance Premium of 2.25% of the loan amount that is financed for you and then there is the monthly premium of 0.55% or 0.50% depending on the loan-to-value.
Oh, and a little more info on my situation...I filed a Chapter 7 bankruptcy and have never owned a home before. Another reason I want to buy now is to take advantage of the $8,000 tax credit. I may also be eligible for our state's downpayment assistance.... more
Ideally for an FHA, the minimum credit score for most investors is now 620. This should be your minimum middle score. You might find that you won't get the best rate until you hit the 650 or 680 range. Keep in mind that FHA does not currently have a stated minimum credit score. It is on the investor end that minimumm score requirements are being enforced. FHA has had some discussion about a minimum but have not implemented one yet. Student loans do not have to be counted against your income if you can prove that they are deferred for at least the next 12 months. Get to work on your scores. You'll find that they will start coming up but it won't be over night. Good luck. www.johnshellington.com... more
The best way to determine what you'll need to qualify for a loan in the near future is to talk with a qualified mortgage broker or lender in your area. The broker or lender will look at your overall debt, your income, your length of employment, past tax returns, assets and savings (bank accounts, savings, stocks, etc.) and your FICO score to help you plan to reduce your debt and increase your FICO score and stash money away to cover closing costs and a downpayment. Right now, the bad news is that FICO mid-score (the middle score between your highest FICO score and the lowest) must be at least 620 to qualify for FHA loan, and you must have at least 3.5 percent of the purchase price available for a downpayment plus about 10% more to cover closing costs. At $70,000, that would mean having savings of almost $10,000 to comfortably afford a new home.
Talk with a broker today, so that you can plan to purchase a home in the future.
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
Co-Host "Naked Real Estate" on www.blogtalkradio.com... more