FHA or USDA with high DTI but decent score??

[goodygoody]

Hi, I'm just curious whether it's possible to get an FHA or USDA mortgage if you have high credit card utilization/debt to income ratio, but otherwise have an ok FICO score?  DH was laid off for a while a year ago, and we basically lived on credit cards, so our utilization is probably around 75-80%.  I've been working at paying them off, but we have expensive rent and expensive utilities (we rent an old farmhouse heated with electric, and that bill alone is sometimes $260 a month!).  We've still ended up putting stuff back on the cards because our bills are high.  We'd like to move, but we have kids and would prefer to move when we have a long-term home rather than moving for a year and then buying, risking them changing schools twice.  

We have absolutely nothing bad on our credit reports, and I've checked our scores regularly and even with the high utilization they're around 650-670, which I understand is high enough for both FHA and USDA.  So my question is, can you get one of these loans with high utilization if your score is high enough to qualify?  Or do you qualify but for a drastically lower amount due to the utilization?  

[Peter1142]

Your utilization is not independently looked at, it is only a factor in your score. For USDA most lenders want a 660.

If your minimum payments are high because of util, that will factor into your DTI. Whether it is an issue or not depends on how much your income is vs how much you want to borrow. I would also be concerned that you are have enough cash for down payment / closing costs, if you are having difficulties paying your bills. USDA may not have a down payment but there are still closing costs which in some places can be very high ($10-25k), or not at all ($5k).

[newmomnewme]

I submitted my application for USDA RD Guaranteed Loan Program 12/12/2013 (past thursday).

Your monthly debt including housing costs can NOT be more than 41% of your gross monthly income.

So Gross Monthly Income x 41%= Debt +Housing costs... has to be 41% or below to qualify and that is how much you will be approved for.

[meesh6036]

Like the others said, it will effect the amount you can borrow. Your utilization is already counting against you with your score.

My utilization was really high and I just closed with an FHA. We make enough that we were able to get the loan amount we wanted even with the dti hit.

Good luck!

[maghome]

I just closed on a USDA loan and my dti is 47%. However my new mortgage and my previous rent are only $10.00 difference. So there was no payment shock plus my middle score is 701 lender pull.

[goodygoody]

Thank you all for your replies - very helpful!  Sounds like we're just going to have to suck it up and somehow get this debt down.  On the bright side, my husband was just offered a job paying $10 more an hour than what he's making now, so that's a pretty good start!!!  

[birjest]

Congrats on the husband getting a new pay increase.  If you can hold out until summer, it would benefit your family, since the hubby will have 6 months of the new job under his belt.