First Time Buyer needs info

[NCRebuilding]

My wife and I are looking to buy our first home. I'm just starting to learn about the process and requrements. I would like to get an FHA loan, but I have some questions about the requirements. I will provide some background info first.

My wife doesn't work (outside the home), and her credit is bad. Can I apply for the loan in my name only?

Income: My income is $88k per year, and I expect at least a 10% increase in the next 6 months. It's about an 80% certainty.

Debt: Total debt is about $19k. About 99% of that is car loans.

Scores: currently 603 TU, 586 EQ, ?? EX But I am working on these and they are going up about 10to 20 pts a month. I expect to see a big jump soon when I get a couple CA's off

House: In this area, a $250,000 house s very nice. So we are looking at something in the $200k to $250k range

My questions are around the FHA requirements. I expect to have scores in the mid 600's (or better) by December, when we are looking to buy. In the requirements I've read it says that you have to have perfect credit since Bankruptcy. We filed back in 2003. Since then we have had some lates. In the past two years I have doubled my income. I can come up with the 3.5% or even a little more.

I've been employed for the past 2 years with the same company with increasing income. It is a stable job in a good industry. My biggest concern is lates in the past year. Since I've become more informed about credit scores and the industry, I've remained current, but I do have some lates that are about 6 months old.

How badly will this hurt me? Do I need to put off buying a house for another year? Everything that was discharged in the bankruptcy will drop off in December. I'm not sure if that will give my scores a bump, but it will make the report look a little better. Any help/advice is appreciated.

Thanks!

[ShanetheMortgageMan]

The "new new negatives since BK" guideline for FHA really only is applicable when the BK was fairly recent (3-4  years) and there is a major negative (tax lien, judgment, collection/charge-offs) afterwards, or if there are negative items in the past 12 months, and typically only when doing a manual underwrite approval.  If your loan can get approved via automated underwriting (FHA TOTAL) then negatives after the BK aren't as big of a deal.  

Now in your situation, since the lates are just about 6 months old, it doesn't bode well for your chances of getting an automated approval - I have a feeling that the reason that the scores improve a bit each month is because you are distancing yourself from those lates, getting CA's and what not removed would help but not as much as perhaps writing a goodwill letter to ask if your creditors would be nice.  Would need to know how much your debt payment sare to say if you'd be OK for that amount of house, but unless your car payments are more than $1k/mo you should be OK.

If you can't qualify as soon as your scores hit 620 then I'd suggest waiting again when the negatives are all over 12 monts old.

[NCRebuilding]

Thanks, My debt payments are less than $750. I will attempt the goodwill letters, but I don't hold out much hope for that. Are there any "incentives" that can be offered that will appeal to the creditor. Possibly keeping the loan a month ahead for several months, or offering to pay a substantial portion immediately (several thousand dollars for example)?

Thanks.

And yes, part of the increase has been distancing myself from the lates. Another factor is that I opened a couple of revolving credit accounts. I did not have any before and discovered that I needed the different types of accounts to raise my score.

[ShanetheMortgageMan]

Sounds like it's just a matter of your scores increasing then.  The incentive from a creditor's viewpoint is that they are making as much money off you as possible without you being in default of your agreement (being late), so paying the minimum payments as soon as the payment is due is definitely the way to max out the creditor's profit on you... would that entice them?  It'd definitely make you a valued customer, but not sure if that is the icing on the cake you'd need to convince them.