FHA Mortgage Qualification and Credit Card Debt

[twoaklawn]

I've read that underwriters only consider the minimum payments as reported on the credit report when calculating DTI.  But how does the total amount of debt impact the overall approval decision and the rate you are offered?  I'm considering my first home purchase with an FHA loan and here are the details:

Purchase Price =  96,000

Down Payment @ 3.5% = 3390, but will probably put $5000 down.

I only want to do a 15 year mortgage.

Gross Income = $4276 monthly (14.5 years with same employer, hourly pay so no fluctuations)

Property will be a single family home that is my principal residence.

My concern is that I have a total of $19,000 in revolving credit card debt spread over 6 accounts (but mostly two Chase cards with large balances).

Minimum payments on my CR total $399 per month.

I have $2000 in savings, will be gifted $2000 from a relative, can pull $4500 out of my retirement account, and seller is offering a $2500 assist for down payment and closing costs.

I have no other debt such as loans or car payments.

My PITI for this property for a 15 year, assuming a 3.75% rate, taxes as listed on county website, hazard quote I have received online, and MIP of 46.75 per month for going with FHA would be $1012 per month.  So by my calculations that puts my DTI at 24/33.

Latest scores from myfico.com were EQ 709 and TU 701.  Last EX was 7/2011 from their website and was 708 (not a real FICO I guess)

All credit reports are completely clean.

I would really like to buy while the rates are low.  I know I should pay down the debt first, but frankly, I'm paying $1000 for rent on a one bedroom apt (which is typical for my area) and my friends are seeing 5% rent increases on their new leases.  I don't see why I should wait when my mortgage wouldn't be much more than the rent while I'm paying down those card balances (And yes, I realize there are additional expenses to be considered when living in a home versus renting).  For the same monthly outlay I can have a 2 bedroom house with my own yard to putter around in!

But again, back to my original question.  Regardless of the wisdom of buying a home while still having that much revolving debt, how much will having that much revolving debt factor into my getting a loan approval do you suppose?  Do they really only care about the minimum payments?

Thank you for your consideration!

[webhopper]

I'm pretty sure they only count minimum payments... I think you should chat with a lender to make sure.

[beb86]

The look at Min payments to calc DTI but also remember anyone who gives you a "gift" it needs to be either "seasoned" 60+ days depending on lender or the Gifter (lol) have to turn over a gift letter and at least 2 months of bankstatements, cancelled checks, dna, first born, etc...

[twoaklawn]

I guess I will have to ask the various lenders.  It would be an electronic transfer from my 80 year old mother's account directly to my checking.  She would certainly give me a letter, and as for her bank statement, she has maybe five debit card transactions a month, and hasn't written checks in years!  So there certainly isn't much activity there.  Not sure how they would view that.  That $2000 is a fraction of what she has on deposit at the bank though!

[beb86]

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@twoaklawn wrote:

I guess I will have to ask the various lenders.  It would be an electronic transfer from my 80 year old mother's account directly to my checking.  She would certainly give me a letter, and as for her bank statement, she has maybe five debit card transactions a month, and hasn't written checks in years!  So there certainly isn't much activity there.  Not sure how they would view that.  That $2000 is a fraction of what she has on deposit at the bank though!

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The banks are all pretty much on the same page when it comes to gifts..... The banks big concern is to make sure that you or whoever is gifting you funds didn't just go out and get a loan.