This is my wife and I's first time in buying a home and we could use some expertise from the forums. 
Info from the “Do I qualify for a mortgage” sticky…
1.Credit – EQ pulled 11/28/2014 for car loan – 678, TU pulled from myFico.com 11/21/2014 - 670 No negative items, no late payments. Question one – concerning authorized user account for Lowes credit card. My wife went to the store to purchase the appliances while I was at work, she app’d and was approved (my info was included). We are married but for some reason the cc shows me as authorized user. Not sure if this matters and or how it will factor DTI? Since the last pull I have dropped my revolving utilization down a good bit (about 15%) and am expecting a slight bump in score. I will be pulling my FICO scores from here before I talk with a lender in order to have them in hand during the meeting.
2.Income – Yearly salary me $57,090. Wife finished her degree in August 2014 started working in her field in Sept. 2014. Previously worked part time at the same job until she completed her degree. This is question two – unsure how her income would be calculated? From what I’ve gathered online hers would be accepted since she started working after graduating in her field of study. From what I have averaged her gross income from Sept 2014 through Jan 2015 she is grossing approx. $2500 a month (low approx to be safe).
3.Source of income – Full time employment, my income is salary and hers is hourly with shift diffs depending on days and hours worked (RRT in hospital setting).
4.Monthly debt payments – From the research I have done on what is included in DTI calculations I have come up with the following. Using minimum payments the monthly debt is $2801.35 ($2800). Taking my salary and dividing by 26 checks (monthly gross) and adding her monthly gross (assuming it is accepted, question 2 above) gives a monthly gross household income of $6891. I divide that by our current bills (cc’s, loans, auto, and child support) and I come up with exactly a 28% front end ratio. By adding in the approx. cost of the new mortgage (including property taxes and PMI from online calculator - $680) 3.5% down FHA loan? The back end ratio comes up to 37.33%.
5.Employment – Me, employed full time same employer for 9 years 6 months. Wife, current position 5 months recently graduated from respiratory therapy with a degree. Was working for the same heath system part time low hours, low pay just to keep her spot with the hospital. Unsure how this will be calculated.
6.Assets/Reserves - approx $8500 in savings currently and we keep approx $2000 in checking at all times (after bills are paid). I also have a 401k at work with approx $50,000 fully vested depending on market. Wife has a 403b (not for profit hospital, similar to 401k) with approx $6000 fully vested. We also currently "own" our own mobile home (1980s model that we remodeled). Not sure how that would be shown as assets though as this was given to us by a family member and wasn't "purchased".
7.Location – Assumption Parish (yeah we don’t do that county stuff 
) Louisiana is where the property is located.
8.Property – The property is a single dwelling family home, ready to move in (friends of ours are moving out).
9.Value – The house is listed at $112,000 but the owners agreed to $100,000. I would request an appraisal in the process and we would see where that ends up. Or should this be done first?
10.Occupancy – Primary residence.
11.Transaction Type – Purchase.
If it is felt that I would qualify for a mortgage in this range, my next questions would be where to start? Do I talk with a lender first? Or an appraiser? Would working with my local community bank be better than a “mortgage lender?” Would FHA be the way to do for 3.5% down? First time home buyer programs?
Sorry for the length of this post but I wanted to make sure i covered all the requested topics.
Thanks for any help, it is truly appreciated.
Starting Score: EQ 623 (1/28/10) TU 666 (1/28/10)
@jordy wrote:
1.Credit – EQ pulled 11/28/2014 for car loan – 678, TU pulled from myFico.com 11/21/2014 - 670 No negative items, no late payments. ... I will be pulling my FICO scores from here before I talk with a lender in order to have them in hand during the meeting.
2.Income – Yearly salary me $57,090. Wife finished her degree in August 2014 started working in her field in Sept. 2014. Previously worked part time at the same job until she completed her degree. This is question two – unsure how her income would be calculated? From what I’ve gathered online hers would be accepted since she started working after graduating in her field of study. From what I have averaged her gross income from Sept 2014 through Jan 2015 she is grossing approx. $2500 a month (low approx to be safe).
6.Assets/Reserves - approx $8500 in savings currently and we keep approx $2000 in checking at all times (after bills are paid). I also have a 401k at work with approx $50,000 fully vested depending on market. Wife has a 403b (not for profit hospital, similar to 401k) with approx $6000 fully vested. We also currently "own" our own mobile home (1980s model that we remodeled). Not sure how that would be shown as assets though as this was given to us by a family member and wasn't "purchased".
If it is felt that I would qualify for a mortgage in this range, my next questions would be where to start? Do I talk with a lender first? Or an appraiser? Would working with my local community bank be better than a “mortgage lender?” Would FHA be the way to do for 3.5% down? First time home buyer programs?
Sorry for the length of this post but I wanted to make sure i covered all the requested topics.
Thanks for any help, it is truly appreciated.
1: Your current scores appear a bit lower than I'd expect based on the info provided ...as to using them in discussions with a mortgage lender, dont bother ...the scores you see on myFico are based on the FICO 08 model used by most CC lenders ...the scores pulled by your mortgage lender will be based on the older FICO 04 model and tend to be lower by ~50 points though it varies widely. If both you and your wife are on the loan app, they will pull both score sets and use the lower for qualifying purposes. Once your mortgage scores are pulled you'll know where you really stand credit wise ...if needed, the Credit Repair forum here can help with ways to improve it.
2: Your income is more than sufficient for a 100K loan. They will consider her income as well but other than DTI it won't affect qualifying on a 100K loan. Each lender will weigh her income differently depending on both internal and external overlays for the type of loan you are seeking, but as a practical matter, its moot.
6: If you have title to your current home then I would have a realtor give you a market value and put it up for sale. It will certainly affect underwriting consideration of your assets/reserves. As for your 401k/403b accounts, what matters is what you can readily borrow from them, at what rate, and the personal tax implications. A "good" mortgage lender will be able to help you determine if borrowing from them is in your best interests ...but with a bit more info there are many experienced, reliable members here who could be of help as well ...consider posting it as a separate question with more specifics.
...the key issue here imnsho is that you appear to have more than sufficient assets to put a 20% dp on a $100K loan ...even if you use an FHA guaranteed loan, a 20% dp will remove the PMI from your monthly mortgage payments ...if you put only 3.5% dp you will be stuck with that PMI for a long, long time ...if your credit scores qualify you for a conventional loan with 20% dp, I think you'll find the apr will be lower as well.
...assuming the info posted is accurate, you should easily qualify for a $100k home ...in your specific situation you really don't need a realtor but I'd use one anyway to ensure an arms length distance from your friend's realtor ...there are no "friends" when it comes to financial transactions such as this ...your other friends/family may be able to recommend a realtor or a little research on google will turn a decent one up ...if you have a CU try to use them for the morgage loan, they generally have better rates ...else ask your realtor to recommend a local mortgage source she has had good experience with ...try to stay away from the big banks unless you have a strong existing relationship with one ...they tend to be nit pickers and slow/poor closers
...don't apologize for the length of your post ...we could only hope that more would follow your example ...hth
If your total combined income is below 74750 you can qualify for USDA guaranteed loan it can be a bit of a trick to figure out who writes em in your area, but your parish does qualify.
@Anonymous wrote:I'm not in the mortgage business, but from hanging around here, and in my own experience obtaining a recent mortgage I'd say you're good to go. And based on your stats, you could probably qualify for a lot more than 100k.
thanks for the boost of confidence... I kinda feel ok about it... i think.... lol
I probably could be approved for more, but I simply don't need it.
@Lemmus wrote:
1: Your current scores appear a bit lower than I'd expect based on the info provided ...as to using them in discussions with a mortgage lender, dont bother ...the scores you see on myFico are based on the FICO 08 model used by most CC lenders ...the scores pulled by your mortgage lender will be based on the older FICO 04 model and tend to be lower by ~50 points though it varies widely. If both you and your wife are on the loan app, they will pull both score sets and use the lower for qualifying purposes. Once your mortgage scores are pulled you'll know where you really stand credit wise ...if needed, the Credit Repair forum here can help with ways to improve it.
2: Your income is more than sufficient for a 100K loan. They will consider her income as well but other than DTI it won't affect qualifying on a 100K loan. Each lender will weigh her income differently depending on both internal and external overlays for the type of loan you are seeking, but as a practical matter, its moot.
6: If you have title to your current home then I would have a realtor give you a market value and put it up for sale. It will certainly affect underwriting consideration of your assets/reserves. As for your 401k/403b accounts, what matters is what you can readily borrow from them, at what rate, and the personal tax implications. A "good" mortgage lender will be able to help you determine if borrowing from them is in your best interests ...but with a bit more info there are many experienced, reliable members here who could be of help as well ...consider posting it as a separate question with more specifics.
...the key issue here imnsho is that you appear to have more than sufficient assets to put a 20% dp on a $100K loan ...even if you use an FHA guaranteed loan, a 20% dp will remove the PMI from your monthly mortgage payments ...if you put only 3.5% dp you will be stuck with that PMI for a long, long time ...if your credit scores qualify you for a conventional loan with 20% dp, I think you'll find the apr will be lower as well.
...assuming the info posted is accurate, you should easily qualify for a $100k home ...in your specific situation you really don't need a realtor but I'd use one anyway to ensure an arms length distance from your friend's realtor ...there are no "friends" when it comes to financial transactions such as this ...your other friends/family may be able to recommend a realtor or a little research on google will turn a decent one up ...if you have a CU try to use them for the morgage loan, they generally have better rates ...else ask your realtor to recommend a local mortgage source she has had good experience with ...try to stay away from the big banks unless you have a strong existing relationship with one ...they tend to be nit pickers and slow/poor closers
...don't apologize for the length of your post ...we could only hope that more would follow your example ...hth
1. At the time those scores were pulled my revolving uti was about 25% higher than what it is now. I am thinking I may receive a slight point increase (slight) due to the lowered revolving uti. My wife had been in school for 5 years and only working part time (very few hours) and we racked up some cc debt along with a line of credit for our current mobile home remodel. The line of credit is shown as revolving debt on CR. Now that the wife is done with school and working full time again we are aggressiely paying this down. On the CR scores I previously spoke of our utl was in the 79% range (manily the CL). Our uti is now in the 54% range. Obviously, i would like to be entering this mortgage with the range below 10% - ideally 1-5% but time is currently the issue. I have nothing negative on the report, 3 inquiries (one falls off in Feb) and a mix of account types (CC, loans, auto loans - no mortgage). My AAoA is young (approx. 6 years). What I see affecting my score currently is the heavy revolving uti, which I am aware of, but at the time was needed to get my wife through school with very little student loan debt. This house is in the location I want, in the school zone I want, at a price I feel comfortable with and the size my family needs, nothing bigger. The current owners are ready to sell and I don't want to miss out while getting the uti lower and stack up my savings over the next 6 months.
2. Thanks for the info on the income information. I'll discuss futher with the LO and see what they do.
6. We will be putting our mobile home up for sale but are only expecting approx. $10,000 for this sale (mobile home only not property). It is a very old mobile home and although it has been remodeled, I don't see much more value in it than this. It would also need to be moved which the buyer would incur this cost. I think I could be approved for a conventional loan with 20% down (from what I've read) and this was actually our goal. Save for 20% down payment + costs + reserves. My factor here currently is time. I don't want to miss out on this house because of what it has to offer. The location, size, potential and lastly the price all suit what my family needs.
I would rather not borrow against my 401k but if this is in the best interest and makes the best sense then that is an option I may look into further.
I was thinking of using my bank (a local community bank) as they previously gave me a mortgage loan for land ($37,500) pretty easily. I guess I was just curious if a mortgage lender makes better sense over a "traditional bank". i.e. do they have better terms, or programs, or are more familiar with these loans. I have enjoyed working with the lenders at my bank in the past which is why i was considering using them. I will definelty go the realtor route as well just because I agree with you, I want someone on my side through this process not just the realtor for the friends. A big monetary decision can easily come between a friendship.
I typically try to spend as much time researching before I make a post and if I do post I want to make sure I follow the theme... helps make life a little easier for everyone
Thanks for all the helpful info!
@Anonymous wrote:If your total combined income is below 74750 you can qualify for USDA guaranteed loan
Thanks for the info, we would be probably be outside of the combined income for USDA loan (depending on how they look at my wife's income) - and even if I were closer to it I would probably leave that loan to someone who needs it more as, from what I've read, they are on a limited funding basis. I am fortunate enough to be in a position where I currently don't need to use that funding and can leave it for someone else who may be in a tighter situation...
Thanks!
@Anonymous wrote:
9.Value – The house is listed at $112,000 but the owners agreed to $100,000. I would request an appraisal in the process and we would see where that ends up. Or should this be done first? You have no choice in the appraisal decision, all banks will require one, so don't get one now or you would be paying for two, only bank initiated appraisals count for mortgage purposes, at least that is my understanding. Also, even though these are your friends make sure you get a home inspection, that is a must and don't be afraid to ask your "friends" to make repairs that are found during the inspection. When I bought my home there were some repairs that I wanted made and the sellers and I agreed on splitting most of them.
I guess I was thinking more along the lines of when should the appraisal be done? Do I go to the lender and see about pre-approval and then order the appraisal? I guess what I would be concered with is if the appraisal is much lower than listed price. I would need to talk the seller down to that amount or come up with the difference in cash or some number in between. I was wondering if you ordered an appraisal before you started the loan process, so you could have the figure down before jumping through the pre-approval process and credit process. If from jump streeet the appraisal is lower and the seller and I cannot agree to meet on a number then why worry about preapproval... I guess I'll just have to start the process and hope it hits the appraisal and is simple.
An inspection will definelty be done as although friends, I don't want any future issues down the road. There are a few repairs that are needed (that we've already noticed pre-inspection - paint, spakle) and we already discussed some of those. I don't think we'll have any issues working towards resolution on those.
Talked with LO yesterday, she stated we should have a pretty good chance at approval. She did however mention that for the FHA loan a middle score (lower of the two from my wife and I) would need to be at least a 680 to qualify. I wasn't thinking that the score needed to be this high for FHA approval. Is this correct? or is this just their requirements? Also, she recommended waiting until after Jan. 26th to pre-approve as the new FHA PMI rates will come into play. I have been reading up on this and although i don't quite follow, whatever reduces the note is probably worth waiting a couple more weeks for. Any ideas on the minimum score? or should I check with a different lender?