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Advice Needed on home purchase CA

Established Member

Advice Needed on home purchase CA

Here is my situation:
My income is $125k a year but have FICO of 650.
Spouse's income is 80k a year with about 710 FICO
We have $200k for a down payment

We want to buy a home that is $840k. We can put 20 percent down or all the $200k which would be about 24 percent.

Front end DTI around 15%
Back end DTI around 35%

Assuming 20 percent down that leaves mortgage amount of 672k. So a jumbo loan.

What options would we have for qualifying? My fico is low so not sure what we can do. My parents have 720+ credit and good income as well, could they co-borrow or co-sign along with my spouse?
Message 1 of 5
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Moderator

Re: Advice Needed on home purchase CA


kokings wrote:
Here is my situation:
My income is $125k a year but have FICO of 650.
Spouse's income is 80k a year with about 710 FICO
We have $200k for a down payment

We want to buy a home that is $840k. We can put 20 percent down or all the $200k which would be about 24 percent.

Front end DTI around 15%
Back end DTI around 35%

Assuming 20 percent down that leaves mortgage amount of 672k. So a jumbo loan.

What options would we have for qualifying? My fico is low so not sure what we can do. My parents have 720+ credit and good income as well, could they co-borrow or co-sign along with my spouse?

Realistically go talk to a slew of lenders as jumbos are all let's make a deal anyway.  650 is awkward in jumbo territory though it is loosening up - my own employer (who isn't competitive in the jumbo space anyway, we don't want to portfolio loans frankly) won't underwrite anything sub-680; I just checked Chase's calculator which was 100% accurate for me when it came to both my original jumbo and secondary conventional quotes, and they won't do 650 at 20% down; actually they won't do 650 at 30% down either, looks like 680 is their minimum UW line as well.

 

If I were you I'd be talking to a couple of CU's like Logix or Penfed who are doing 10% down loans as I suspect most of the big banks will have similar UW policies and the 10% downers may have reduced their UW requirements in other places too and 20% down might buy you in.  Also I'd go look for portfolio lenders too, you might pay a higher interest rate but you've got clearance on your backend DTI, and you have assets which is a big hurdle in the jumbo space.  

 

As I understand it your parents would pretty much have to be living with you to qualify their income though someone might know of a different option there; any chance they can simply gift you ~20K for downpayment and closing costs so you fit under the magic 625K line assuming you qualify in a high balance area for conventional financing?

 

Short of that I'd look for some quick wins on your credit report if you haven't done so already, though I'm guessing with your registration date you've already done what you can to put lipstick on the pig.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Message 2 of 5
Established Member

Re: Advice Needed on home purchase CA

What would be the advantage of applying for a conventional loan only?  (instead of a jumbo)

 

We would have access to more money down through my parents home equity loan which has a lot of room (we would make the payments on whatever we took from there).  But not sure how banks would look at that if the money we are putting down is coming from another "loan" even though it's not a direct loan in our name.

 

We could put enough down through a combination of our own assets and the equity loan to only need a conventional loan of $625k -- but how does this help the original problem of my credit being poor but my income is needed.  My spouse wouldn't qualify on her own because her income isn't high enough.

Message 3 of 5
Moderator

Re: Advice Needed on home purchase CA


kokings wrote:

What would be the advantage of applying for a conventional loan only?  (instead of a jumbo)

 

We would have access to more money down through my parents home equity loan which has a lot of room (we would make the payments on whatever we took from there).  But not sure how banks would look at that if the money we are putting down is coming from another "loan" even though it's not a direct loan in our name.

 

We could put enough down through a combination of our own assets and the equity loan to only need a conventional loan of $625k -- but how does this help the original problem of my credit being poor but my income is needed.  My spouse wouldn't qualify on her own because her income isn't high enough.


Put simply, conventional (and FHA) will underwrite at a 650.  Jumbo may still hold the 680 line, evidently some of the usual actors absolutely do.

 

Different loan product, different UW requirements as a result.  Mortgages are going to take the lowest of the middle scores for all borrowers on the loan (in your case, you and spouse) and other than your score, you sound pretty golden, so now you just need to find someone willing to work with your score... you have already checked your explicit mortgage scores recently via 3B report here or similar?  For the discussion you really need to know precisely where you're at as for example my own mid score came in >20 points higher than the one mortgage score I have access to regularly, and when you're playing in the middle tiers of the mortgage world, that's a big swing either way which may influence which route you need to go.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Message 4 of 5
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Valued Contributor

Re: Advice Needed on home purchase CA

Under 680 will be tough with a jumbo loan. You had a great idea in your original post - having one or both parents cosigning with your spouse. You can always add your name to title, you just wouldn't be on the loan.

Mortgage Loan Officer in Northern California - lending in The Golden State from the Oregon border down to San Diego!


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