Advice on 1st Mortgage

[Anonymous]

I have read so many helpful responses on this forum, I figured I would throw my own situation out there. My partner and I would like to buy our first home this spring. We have been waiting for a long time for our credit to clear up and I finally feel like we are in an ok position. We live in Rhode Island and are looking for a home around 200k, with 220k being our absolute maximum. I gross $42,000/year and she grosses $32,000/year. We have both been with our employers for a number of years. My scores are TU: 747, EQ: 720, EX 714 with no lates. Her scores range from 630-650 (I don't have them in front of me). She has a number of lates, charge-offs and a car repossession from 7 years ago. Most of her problems have fallen off but a few will remain until March. For the past 7 years she has had credit cards and student loans, all paid on time. At the time we apply for the loan we will have a $270 car payment and about $900 in student loan payments each month. Also we will only have about $2,000 or $3,000 saved and I have $25,000 in a 403(b). So, are we in the ok position that I am hoping for? I know there are lots of mortgage programs out there such as FHA and the RI state program that we may qualify for. Thanks so much for reading!

[ShanetheMortgageMan]

The car repo or charge-off wouldn't have to be paid for a Fannie Mae conforming loan program... they could be required to be paid for FHA.  For conforming your debt ratio should qualify because you have quite a bit of funds in the 403b which is used as a compensating factor.  For FHA the debt ratio might be too high for the $220k and is still borderline for the $200k sales price.  I'm not familiar with the state RI program, but usually state sponsored programs are more stringent on credit requirements than conforming.. but not as stringent as FHA.

[Anonymous]

Shane,

Thanks so much for your help.  It is highly probable that the charge-off and repo will be gone from the credit report by the time we actually apply.  I guess we'll see!

[ShanetheMortgageMan]

You are welcome!