If my FICO score is in the mid 600's and my only financial obligation is a car note, what kind of problems might I encounter when trying to

Asked by Cheryl Hamilton, Louisville, KY Thu Apr 8, 2010

purchase a home? (presently a homeowner about to be affected by BRAC).

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, ,
Fri Apr 9, 2010
Hi Cheryl,

Sorry to hear your base is closing.

As far as what kind of problems you may face, it will depend on a couple of things.

1) What are your plans for your current home?
A) If you're going to sell it, you'll need to either sell it prior to closing on your new purchase or you'll need to qualify for the new mortgage while "carrying" your current mortgage payment.
B) If plan on retaining and renting it out, this will effect your new purchase based on whether or not you have any remaining eligibility available for use if your current mortgage is a VA loan and you want to use a VA loan to purchase your new home.

2) I would assume that you want to use a VA loan for your new purchase, right?
If so, we would need to determine how much eligibility you have available to determine what purchase price you qualify for.

Please feel free to contact me for help or more information.
1 vote
Michael Genn…, Agent, Media, PA
Thu Apr 8, 2010
Hello Cheryl,

Thanks for your question!

Sounds like your credit score should allow you to purchase via a FHA loan. If you are at 680 or above you can go with a Conventional loan.

The old standards are back in place in regard to income and debt. To figure out your purchase power do two things. 1) Multiply your monthly gross income by 31% to get your "income ratio" maximum payment amount. For example: Gross monthly income = $7000 x .31 = 2170.00.
Now take all of your monthly debts plus your new payment of 2170. For example car $200, credit cards $200, student loan $100 plus new payment = $2670. Now multiply your gross monthly income of $7000 by .41 for your "debt ratio". This gives you a figure of $2,870 maximum payment qualification.

The best answer you will receive will be from a mortgage professional that works in your area. They can get you "Pre-Approved" which will tell you your exact purchasing power as well as make you a stonger buyer when submitting an offer.

Hope this helps!
Web Reference:  http://www.HomesInDelco.com
0 votes
Phil Martin, , 75013
Thu Apr 8, 2010
You should be fine as far as FICO is concerned. FHA, VA, USDA or HUD homes could be options that require the least or zero down. If you moving to TX, I'd love to help.
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