My Fiance wants to buy a house for $140000 using an FHA loan but he only has 1 yr job history and credit score of 640

Asked by Alex Ben-el, Minneapolis, MN Fri Dec 28, 2012

Before this W2 position he owned a business, but suffered losses from them. This is his only documented work history. We spoke to someone at Wells Fargo and they said that 1 yr of work history is fine, but bc he wasnt in school or the military before this positio-- will they still be willing to overlook it?

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Chris Block’s answer
Chris Block, , Saint Paul, MN
Mon Dec 31, 2012
My best guess Alex is that this is a Fannie Mae guideline. We all have a ton of different Loan officers we use, but just about every one of them just service the loans to Fannie. I do have a correspondent lender I use for a lot of tough loans, and if there is anyone that can get around this it would be them.

One thing you can do is try going to the bank no one has ever heard about. Every city has them, and these banks don't advertise on google (or usually at all). A lot of "Community Trust" kinda names. They are basically small regional banks that potentially service their own loans and keep them on the books instead of servicing them and just selling to Fannie. Investors use them a ton for commercial loans, and that would be a route I would research quite a bit.

If neither of the above options work then your Fiance can look at a rent-to-own option for 1-2 years. Contract for Deed financing needs to be 10% down, but I have rent-to-own properties right now in your price range for $5,000 down. This is a seller financing program where the banks regulations do not come into play, so in other words if you have the DP and income you will qualify.

This is in my realm, and I can tell you that a lot of self-employed contact me or ones in this scenario. It is absolutely brutal right now getting a residential loan for this group of people.

I always find it funny that realtors complain about tight lending standards, but we are quick to disqualify and judge buyers who do not fit the correct standards of bank lending. Why should it matter if your finance was self employed previously or in college? If he has strong current W'2's and feels that the job is stable you are an excellent candidate.

But really it is not our job as realtors to judge because we are not loan officers, nor do we provide any type of financing for you. We are also not CPA's or certified financial planners. It is none of my business to be disclosed your financial information. My job is real estate and helping people buy and sell homes ethically.

Only you know if financially you are prepared to take on home ownership. Chances are you are currently renting and have an idea of where your monthly payment needs to be.

There is a path to home-ownership if you are motivated enough and willing to not take no for an answer.

Good Luck!

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Russ Douville, , Saint Paul, MN
Tue Apr 16, 2013
As lenders we like to see a two year work history. Work counts, as does education and military experience, so does self employment. This doesn't mean he needs to be in his present job two years. To consider his current income as qualiying income to get a mortgage, he needs to be working in a related field (something similair to some he has done before), he needs to be on the job at least one month, and he can't currently be in a "probationary period" at work.
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Eric Fager, Agent, Crystal, MN
Fri Dec 28, 2012
Hi Alex,

The best place to start is with a loan officer. They will be able to look at your individual situation and get you the approval or get you on the path to an approval.

If the downturn taught the real estate industry anything, it is that homeownership must be fully integrated into your larger financial plan.

I can get you in touch with several different originators and financial coaches who have a great track record of getting people through the financing hoop.

You can contact me by phone or email.

Good Luck

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Elizabeth Fu…, Agent, Wayzata, MN
Fri Dec 28, 2012
what is called for here is due diligence. You need to do some research - your real estate representative will help you work with a lender to build a plan that you can afford, a plan that will make sure you buy in a price range, under circumstances that are affordable and supportable in all dimensions. My colleague below has pointed out that making the peg fit, doesn't mean it is a good fit. You need a budget, one that includes all the costs of home ownership, plus you costs of living based on your life style, credit concerns and patterns and if you have any unresolved financial issues or behaviors that could make home ownership a hardship. It is a joy unlike any other to own your own home, be in that home and know it is a "castle" of hopes and dreams that can come true. Liz, 612-986-4105

PS I have years of experience in financial planning and know how to help people builfd realistic spending plans. Call or write if you want some ideas.
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Cameron Piper, Agent, Forest Lake, MN
Fri Dec 28, 2012

It might be a good time to slow down a bit. It has been my experience that those people who can just squeeze into a loan rarely find homeownership to be a blessing. Most of the objections that are raised by credit score and job history can be overcome with a healthy downpayment. If you don't have that, then my recommendation would be to take some time and pile up some cash. Look beyond your downpayment (you want a minimum of 20% down) and attempt to achieve some savings for when the furnace goes out or the roof starts leaking. I would rather see you wait a year and pile away some money than take the leap only to find out that the pool was empty.

Keep in mind that there will always be "professionals" who are willing to make the numbers work for you and sell you the house. That doesn't always make it the right decision. That said, I don't know your complete financial picture, so some objective advise from a financial advisor might be worthwhile right now - just watch out for the "you don't need a house, you need more insurance pitch."

Cameron Piper
Coldwell Banker Burnet
licensed MN Real Estate Broker
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Matt Brown, Agent, Roseville, MN
Fri Dec 28, 2012
Hi Alex,

It is possible to qualify for a loan given your current situation. Even though Wells Fargo will not approve your fiance that does not mean that another lender won't as well. We need to get you in touch with a loan officer that can look at your financial health and give you the steps that need to be taken in order to qualify if they can't get you approved right now. Feel free to contact me anytime and happy house hunting!


Keller Williams Integrity
2680 Snelling Ave N, #100
Roseville, MN 55113

Office: 651-203-1700
Cell: 651-343-3304
E-Fax: 651-340-4072

Visit one of my websites below or see me at
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