FHA loan with Child support arrears and low credit score

[Anonymous]

I live in the DFW area and would like to get a FHA loan for a first time buyer for around $175K but need some advise on which direction to go with my credit. I would also like to ask not to judge me on my past but kindly offer helpful suggestions. This forum has help me get a lot of things corrected and I wish it could continue. 

I'm in the process of cleaning up some past credit issues due to 2 years of umemployment. I would like to get a FHA loan from a lender with few credit overlays because FHA has recently decreased the FICO score to 580. I've gotten my score up to 600 from advise from this board (THANKS SO MUCH) and now I have enough credit cards to work the CL increase tool to maybe get it up to 650 by spring or summer.

My dilema is $20K in child support arrears that racked up while unemployed. I have been making timely payments on the arrears and child support obligation while employed for over a year but it will show over 180 days late until arrears are paid in full. Within the last 30 days I've obtain a new job in my field of employment with better pay and plan to make larger child support payments to offset the arrears. Based on my budget I could have the arrears paid off in less then two year and maybe close to over a year. I really can't wait that long to get a home. I have the other option of getting a secured loan to pay off the arrears. With a $500 a month loan payment my debt ratio will still stay under 25%.

Can I get a FHA loan with my current situation? My income is $90K without bonuses. I have 2 unsecured bank cards and 2 store cards each with a average of $500 CL that are less than 3 months old. Hope to get those increased very soon. Besides the child support arrears, the other negative is a furniture loan charge off that's 3 years old for $2K. (Can only get this cleared by paying but it is in the middle of seven year reporting factor and wonder should I pay? I would like to use this money to continue to pay on the arrears.) I have a few old installments loans in very good standings but will fall off this spring and summer due to age. No car payments or anything else to report but 10 inquires in the last year due to getting credit cards to boost credit score from being unemployed for two years. 

It seems that I should wait unitl next summer but until then, how should I address the arrears in order to get a FHA loan? Should I pay larger payments or get a secured loan to get arrears down to zero. Can I get a FHA loan with my current situation as I work on paying the arrears down? Are there any mortage companies that would look at my situation and provide a loan soon? I will have enough for the down payment and reserve. Thanks for any helpful advise.

[Anonymous]

When your closed, good accounts fall due to age, your score is going to take a hit.

[Anonymous]

I'm not a pro, but spent 8 months in the mortgage process, and learned alot,, but I had a pretty good file to start.

Your back child support is going to drag on you.  Income is good, and the trend is showing up.  You may have to show more history.  "Well yeah he's way behind but paying steady last 2 years, with a steady job."  The back 20k is gonna hurt ya in several ways, mostly pointedly in the DTI, and thats gonna decrease the amount of house you can buy.

If you don't mind me asking where ya living now?  Renting or in a house?

If it were me, I wouldn't do anything till I caught up the child support, it will be complicated. That may mean increasing income somehow.  I knew a guy that made 50k year in trade job, and was 7k back payments.  It was going to take years to catch up.  He took a job on the weekends washing cars at local corner thing, and a year later he was good.

[Anonymous]

Your situation is not so bleak. Yes, you will have to find a mortgage lender that can manually underwrite your loans. As another poster stated, once your installment loans fall off you are going to take a hit unless you add another installment loan.

You're bleeding with  those 180 day lates hitting you every period. Stop the bleeding. Get the installment loans and pay back the arrears so that you can show current starting from that date. Also, I'm sure the other parent will appreciate a giant check. That will also take care of your installment loan problem.

You should start to see credit score improvement once you have your credit cards reporting longer and this hit you are taking every month for the arrears stops. Now, once the new installment loan reports, you may see a dip in your score but you will easily get those points back within months. Then, find a mortgage broker with a lot of options for FHA lenders. Good luck!

[Anonymous]

UPDATE:  I got a loan to pay off the child support and now I'm preparing to get a mortgage. When the mortage company pulled my credit my medium score was 700. What a huge jump. When the back child support was paid, all negative remarks were removed. What a surprise to me. I hope this helps anyone with a similar situation.

[cartwrna]

Awesome news!! And a 700 mortgage score to boot! Congrats and good luck on your journey!!

[StartingOver10]

---

@Anonymous wrote:

UPDATE:  I got a loan to pay off the child support and now I'm preparing to get a mortgage. When the mortage company pulled my credit my medium score was 700. What a huge jump. When the back child support was paid, all negative remarks were removed. What a surprise to me. I hope this helps anyone with a similar situation.

---

What a fantastic solution to your dilemma...thumbs up to you!  Happy house hunting!

[Anonymous]

Can you recommend a loan place? I am in a similar situation, Thanks!

[itallman]

Can you provide us with the place where you received the loan, thanks!