Going to be buying a home in just under a year... would like some advice.

[pritchardhallhokie]

Hi Everyone,

This is my first time posting in these forums so go easy on me please. 

My girlfriend and I are planning on getting engaged and getting a house in the late spring of next year.  Our scores shouldn't be a problem (I have a tax lien filed in GA in 2003 that I paid earlier this year and I have the certified paid certificate, still trying to get it removed all together).  Our scores will be in the low to mid 700s by then (they're in the high 600s now w/ pretty high UTI %).

We will have the following:

Combined income of $90,000

DTI 24.5% (just based on credit debt), with cell phone bills, utilities, etc, it's roughly 36%

No real IRA or 401k balances to speak of.

We have good work history, both of us will have been with the same industry/company for 3 years at the time of application.

What I guess I'm looking for are some guidelines from the experts.  Based on the info you see, with no baddies on the CR in the past 4 years from either of us, the worst of which being a State Tax lien filed in 2003 paid in 2011, and scores in the low 700s at worst.  What would you think we could qualify for if we saved $20,000 for a down payment?  We have been pricing out homes we like in the upper 200s, (usually 280-295) and we're hoping that having 20,000 will be okay based on our DTI and combined income.

Please if I'm way off base asking this, let me know or direct me to another forum.

Thanks!

[Anonymous]

I believe it will help if you state what kind of loan program you’re thinking about apply for, conventional, FHA, etc.

I was able to qualify for a conventional loan using my income only 40k, the only debt I have is a student loan for 7K. At the time my highest CS was 640. I don’t know the max I would have qualified for, because I told then want I wanted 120k, I knew going in what I wanted my mortgage payment to be.

Work history 11 years, I had 20% down and reserves.

[ShanetheMortgageMan]

Even with $1,837mo in credit card payments (24.5% of $90k/year), your total debt to income ratio would be 47-51%, and while that is too high to qualify for conforming financing since PMI providers insuring DTI's don't go over 45% right now (PMI is needed once you go over 80% LTV). FHA financing wouldn't have any trouble approving that and routintely goes up to 56.99%.  In the greater Atlanta area the FHA loan limit is $346k and most elsewhere else in GA it's $271k.

[pritchardhallhokie]

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Thanks for the responses.  Shane, I mislead you I think.  I meant to say that my DTI % based on objects that are on my credit such as rent, car loans, etc is the 24%.  We will not have any credit card debt.

What do you think that would mean for us now?

THANKS!!!!!

[ShanetheMortgageMan]

You are welcome.... rent, cell phones, utilities, etc. aren't included in your DTI (rent can be, if you aren't going to be occupying the new home)... so are you buying it as a rental property/2nd home and that is why you were including your rent in it?  Exclaiming your DTI is XX% is a bit confusing.  I recommend:

Do I qualify for a mortgage? Info that is needed.

Monthly debt payments.  This goes hand in hand with income and the new mortgage payment to determine your debt to income (DTI) ratio.  Only items on credit is the general rule, but also items such as alimony, child support, union dues and some other work related expenses are included too.  Only the minimum required payment amount is what underwriters are concerned with.  Items such as utilities, cell phone, insurance, etc. are not included in the DTI.  If you have a question if something is included just ask.