FHA Loan - Will We Qualify? + 2009 Tax Credit Question.

[Anonymous]

Hello Everyone,

Me and my fiance are going in on a new condo that will be move-in ready by November. However, we are going to contract in May. I was hoping I would have more time to save up for a downpayment, but it looks like the time is now to try and get a loan. Below are the current financials for us:

Myself:

Income: 42k + 5-8k Commision guarantee'd

Job: 2.5 years

Credit Score: 775 Fico

Savings: 1,000 Emergency Fund

Debt:

Car: 380/mo - Will be paid off in 6 months

Car Insurance: 70/mo

School Loans: 130/mo

Cell Phone: 80/mo

Credit Card: 30/mo

My Fiance:

Income: 21k

Job: 3 Yrs

Credit Score: 735 Fico

Savings: 1,000 Emergency Fund

Debt:

Car: 199/mo - Leased Car (We are going to move to one car once the lease is over in 7 months)

Car Insurance: 110/mo

Cell Phone:  90/mo

Credit Card: 0/mo

Combined Income = 68k - 70k 

The Home we are looking at is 255k. We want a 30-yr Fixed FHA Loan. We are first time buyers. Hoping we can use the 8,000k 2009 tax credit for our downpayment + 2k to make the 3.5% requirement (Is using the tax break as a downpayment possible?)

Thanks for all advice!

-Joe

[Anonymous]

Btw...the Building has already been FHA approved.

[Anonymous]

A couple things

You can not use the tax credit as down payment as you do nto qualify for it until AFTER you buy the house.

Second, the DTI is going to be tight.  you are looking at having about 1600 to cover payment, interest, property taxes, Home owners insurance, MIP, and HOA's. 

the payment and interest would be roughly 1100 so that leaves 500 for taxes, HOA, MIP, and home owners insurance.  MIP will be about 110 or so per month.  So, if it is low taxes and low HOA then you should be good.

Make sure the condo is FHA approved before you do a contract.

Also, high FICO scores will sometimes allow for a higher DTI level if you are a little over, but it gets a littel harder with no reserves and minimal down payment. 

[Anonymous]

Thank you very much Mickie!

Do you know how I figured out my MIP and Taxes?

Also, do you know how long I would have to pay the mortgage insurance on an FHA loan?

-Joe

[Anonymous]

Also,

I have to bring a "Pre-Approval" to the table in May (This is when we "Go to contract", but actual closings won't happen until October. This brings up two questions in my mind:

1. How can I better my chances right now to get Pre-Approved. I have an extra pay check in May plus a 1k bonus coming in. Should I put this into savings, or work to pay off my car faster?
2. If I am pre-approved, Can I use the time from now until closing or until I have an actual approved FHA loan to save for a larger down payment?

Thanks again...This forum seems to be a great resource and I appreciate everyones help.

-Joe

[Anonymous]

You do not have to have $ until closing.

I would put any money I could into savings ASAP.  The LO can tell you later to pay off your car, etc if they need to clear some DTI room.  An underwriter is going to be most concerned about the lack of savings and reserves so get some money built up.  With good FICO's and a solid down payment and reserves you should be able to go ahead.

[Anonymous]

If you're in the last few months of your auto loan, won't they waive that debt from your DTI? I remember reading something about that- I may be wrong though.