FHA Loan...Is it even possible? Advice needed please!!

[Anonymous]

My husband and I are looking to get pre approved for a mortgage. We are currently working with BOA, but I would like to have another choice. My husband is commission based and YTD he has made a little over 50K. Last year his YTD was 72K and the year before that it was only 18K due to taking 6 months off work to go to school to get his Insurance license . I make about 26K a year and have been employed for the same company for 2 yrs. My husband has had the same job for 4 yrs except the 6 months he was out of work, after that he went back to the same company.

His middle score his is 640 and mine is 617. I had some collections on mine and have paid a couple of them off to try to get my score to 620, per Bank of America so that they can do a rapid rescore. I thought this would hurt my credit more??? The lady at BOA said that she has a 90% success rate doing this...Did I get some bad advice? We sent the rapid rescore in last Wed and it;s still not back.

We hardly any debt except our car notes around $1100.00 a month and he has a Kays credit card with a limit of $3,500.00 that is half below it's limit. I would like to see if we qualify for an FHA loan. We have around 10K to put down and are looking in the price range of $200,000-$250,000. what are the odds?  How will they average his income?

I have heard that Wells Fargo goes down to a 600 credit score, has anyone used them and been successful?

Thanks for any advice

[Anonymous]

My husband has had the same job for 4 yrs except the 6 months he was out of work, after that he went back to the same company.

Was your husband working in a different capacity with the company before he went to get his license? Was he commission based only for the past year and 1/2?

so that they can do a rapid rescore. I thought this would hurt my credit more???

There are no guarantees with Rapid Rescore. I have seen it go both ways. We use a "What if" simulator that is very accurate as to the effect on a credit score certain actions will have.  Rapid Rescore can take up to 7 business days to get back.

How will they average his income?

I do not know how B of A will do it, but I would try to use his total Commission income for the past 16 months and average over 24 months. Is any of his income base, or is it all commission?

I have heard that Wells Fargo goes down to a 600 credit score

On the retail side they do. My personal experience with them (refi of my own home) was they were way outside the market on rates and fees.

[Anonymous]

Was your husband working in a different capacity with the company before he went to get his license?

Yes, he was in sales and when he went back he got promoted to Finance Manger. ( He works for a car dealership)


Is any of his income base, or is it all commission?

He gets a base draw every 2 weeks of $2000.00. If at the end of the month he doesn't reach a certain % they will deduct the draw from his next check, but that never happens.

[mauve]

Shell, check out the rebuilding boards.  You should search for the collection agencies / original creditors and see if you can find people who've had luck getting them off of their reports.  That's the only way paying off collections will help your score (aside from preventing future adverse action like suits) - getting them deleted. 

Do you have any revolving credit?

Also, your husband can boost his score by paying down that Kay's card.

For ideal scoring for revolving credit, you should have $0 balances on all but one card and a less than 9% balance on the one that reports a balance.

[ShanetheMortgageMan]

Sounds like he made commissions as a car salesman prior to getting the insurance license.

Do you guys have any unreimbursed expenses on line 21 of Schedule A on the tax return?  Or on Form 2106?

From the numbers you laid out, $50k so far YTD (3.5 months), $72k in 2010, and $18k for 6 months in 2009... comes out to $6,511/mo.  That'd be best case calculation IMO.  Conservatively it could be averaged over 24 months, or $5,833.  An underwriter may even be OK using $6k/mo (2010's income).  That'd be the gross income... and then if there are any expenses like I described above those reduce the qualifying income.

What is the payment on the Kay's card?

[Anonymous]

Thank you. That was very insightful!! We do not have any schedule A's or anything.
The payment on the card is $175.00 a month. We could pay that off if we need too.

[ShanetheMortgageMan]

Welcome.  You should be plenty fine for that sales price, even if the underwriter uses the most conservative income calculation.