First time home buyer (I hope!)

[kleahc]

Help! I am looking at purchasing a home (my first) and need to know… well, everything. I know very little, so all input would be much appreciated.   

Credit.  I have a 650 credit score after spending two years rebuilding after a series of medical emergencies left my credit in the toilet.

Income.  My salary is $46,000 per year. **Question: I also have a live-in boyfriend who pays half of expenses, but will not be on my mortgage application (he is self-employed, and as a freelancer, his work history is hard to verify.) Can I include any of the money I get from him on my application? It is about $600 per month.  

Source of income.  I am full-time employed and have been there for 4 years.

Monthly debt payments.  I pay $303 in medical insurance, $125 in car insurance, and have about $600 left in credit card debt, though that will be paid off by the time I apply for my mortgage. *ETA: I guess I sould also say that my rent is $975/month currently

Employment (for those who are employed have worked at my current job for 4.5 years, and have worked in my field for 13 years.

Assets/Reserves.  I have a 401k (but it isn’t much) and I am getting the money for the down payment as a gift from my parents. They are willing to provide up to $25,000.

Location.  Asheville, North Carolina.

Property.  Single Family home.

Value.  Most of the houses I have looked at are around the $160,000-$180,000 mark.

Occupancy.  Primary residence.

Transaction Type.  This would be a first home purchase.

[Peter1142]

You will not be able to use the boyfriend's income unless you put him on the loan, and he would need 2 years of verifiable income via tax returns to use the freelance income.

The only things that count towards debt are typically what is reported on your credit report (I.e. your car insurance isn't debt), and only the minimum monthly payments are used. It sounds like you may not have any, if you pay off all credit cards BEFORE you apply. Leave one with a 5-10% balance for maximum score potential. No car payments, student loans?

Your score of 650 leaves you pretty much limited to an FHA loan. 3.5% down payment is required along with closing costs. There is a hefty mortgage insurance for less than 20% down, though I think if you can come up with 10% this will help the MIP a lot.

If you can get your score above 660 it is possible you may also qualify for a USDA loan, which is cheaper, but a bigger pain to get. Technically you don't need 660 but no one actually does them with less.

[kleahc]

Thank you for your input! No, my car is paid off (and good lord, I hope, good for another several years!) and I have no stuent loan debt. What are ways to get another 10 points on my credit score? I will have paid off all my credit cards before applying, as Isaid, but are there other things I can do?

[kleahc]

Aonther question (sorry, and thanks!) With an income of $46,000, a down payment of $25,000 and no real debts, what price range can I be looking at? As I said, most of the homes I have looked at are between $160,000-$180,000. Is that unreasonable for me to expect? Thank you!

[J_G]

You need to pay off those credit cards as soon as possible. That is what is going to give you the biggest bump in scores specially if your balances are over 30% off there limit. you could easily see 10 points from that! Good luck :-)

[BrianB_The_Loan_Professor]

This price range is reasonable for the income - not sure how much other debt you have but those credit payments will be included.

Try to keep everything (credit car etc plus mortgage with tax and insurance) under 43% and you should be golden

Good Luck

Brian