06-12-2014 04:04 PM
Newbie here, looking for some advice. I would be a first time home buyer. My credit is not so great (a couple bad credit cards and medical bills). Score is 600. Can I qualify for an FHA loan, and where should I try to get a preapproval? Are there certain banks or places that are more lenient than others?
P.S. I make about $30k per year, but I only need to qualify for $90,000-$110,000
06-16-2014 07:15 AM
Kind of hard to say. I went FHA and had bad credit so can relate to my experience.
How old is your baddies ? I have not missed a payment or had any new collections ect for over 4 years. Most are 5-6 years old.
For your score they will take the middle score of all 3 so you might want to get a pull to give you an idea where your at. Also the scores they get and what you get are diffrent so if you are saying you have a 600, it might end up being a 580 or it could be a 620 depending on what they pull.
There are a lot of other factors like needing to be employed in the same field for 2+ years.
How much money do you have to put down ?? You will more then likely need to settle all your bad debt prior to getting your loan. I was pre-apporved with 1 credit card still in collections but had settled all my others prior knowing this. I had 1 $80 medical bill that I did not have to pay but that was it.
Closing will cost you your 3.5% down, 1 year of taxes, 1 year of insurance plus title fees, attorney fees ect. Im bringing 13k to closing.
Knowing my credit was not perfect I went through a mortage broker who has worked with people in my sistuation before. They said I was better then most and would have no problem which I did not. My middle score was 640 lender pull. They told me they had worked with people in the mid 500's. Each situation is diffrent but there are things can kill your chances like if your baddies are 6 months old, you have had a ton of late payments in the past 2 years ect.
Not sure what your time frame is but for me I set a 2 year goal. At the 2 year mark of rebuilding my credit I put in my app as is even though I still needed to pay off somethings and was approved. I would suggest trying to clean up your credit a bit before hand. If you got 10-20k saved up already could give it a try and see what happens. Over that time I was able to settle 3 of my accounts and boost my score from the low 500's to almost mid 600's. Even trying to boost up your score 10-20 points might make a huge difference so if you have more then 20% credit card utilization pay them off. wait a month then app.
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