can i qualify for FHA ??

Asked by Bigjdiesel, Atlantic City, NJ Tue Jan 12, 2010

I was wondering is I currently have credit scored in the 620 range and will have a score of 630 to 650 in a few months can I qualify for a fha mortgage in the 80k to 100k range. I can put 5% down, but my income is gross $1700 a month on paper, with tips closer to 50k, but not on paper. My debts (cc's, student loans, car) are $400 to $500 a month. I am scared my debt to income will not qualify, I would rather do it on my own, if not will a co signer(sister) of 80k verifiable income but credit score around 600 make it?

Also, I heard from my friend that there is a county down payment assistance program that gives a 0% loan for 10% down and closing costs, can this help with approval???? Or is this granted after approval?? thanks in advance.....

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Robin Silverberg’s answer
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Sun Jan 31, 2010
From the numbers you gave, your debt at this time is already 25-30% of your gross income. That only leaves over at most $340 for monthly payments, including taxes, homeowner's insurance, MIP and HOA dues or monthly maintenance, so without even looking at anything, I am sure the answer would be that you would not qualify on your own. Getting a co-signer with a 600 credit score is probably not going to help you. I don't work with any lenders that will allow a credit score of under 620, but maybe someone else does. You can look at what loans you have now that can be paid off to reduce your monthly debt. Once you have less than 10 months to pay on your car loan, that can be eliminated from debt. However, if it is a lease, it will be counted even if the lease is ending within 10 months.
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Debbie Bathen, , 08225
Sun Jan 31, 2010
Dear Big J,

FHA looks for a credit rating of 650, with a 3 1/2% downpayment plus funding fees (which will come out to be around 5%-which you have). The lenders will look at your debt to income ratios, and the guidelines change as to what they are looking for. I would recommend that you contact a mortgage banker. Keep in mind that talking to a banker and getting a pre-qualification does not cost you anything- and it is the first step to see if you can get a loan before you go out looking at homes.

There is also the USDA program, which is government sponsored, with no money down, credit also needs to be around 650, and the debt to income ratios cannot be too high. Also, USDA fits most Atlantic County areas except those with "city" ie Atlantic City, Pleasantville, Absecon, Egg Harbor City. They do fund in areas with "township" names.

The downpayment assistance program I think that you are asking about was for Atlantic City. It was offered for people living and/or working in Atlantic City (property located there as well). There was also the policeman/fireman next door program, but I am not sure if these programs are still in effect. In any case, your best bet is to contact a lender. They are the folks that will know the best options for you-again, at no charge to you. They get paid when the loan closes.

I can certainly recommend a couple of good bankers for you to contact. Please feel free to contact me anytime.

Debbie Bathen-Realtor/Associate
RE/MAX Atlantic
Northfield, NJ 08225
Office: 609-645-0009 x 36
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Grace Hanamo…, Agent, Cupertino, CA
Tue Jan 12, 2010
Hello Big Diesel and thanks for your question.

The best way to determine if you can purchase a home by yourself now, will need the help of a co-signer, or will need to wait until some of the debts are paid off is to speak with a qualified mortgage professional or broker in your area who handles FHA loans. The good news is that your 5 percent down payment and FICO scores (if at or more than 620 "mid score") will qualify you for an FHA loan. However, the debt to income ratio may be exceed the allowable amount for your area., so talk with a mortgage professional for the exact ratios allowed in your area.

As for additional assistance, you can easily obtain this information by contacting your County's government offices or housing division for more information. Many cities, as well as counties, across America provide low cost or no cost assistance for first-time home buyers looking to purchase property in their area. A quick call to your County's government offices should answer all of your questions about available loans and grant programs. Keep in mind that grant money is normally "set" for a year, so it can run out if there is a high demand for finance assistance in your area. Move quickly to have your application into their offices for any assistance programs before searching for a home.

Good luck!!

Grace Morioka, SRES
Area Pro Realty
San Jose, CA
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