How to increase mortgage limit?

[Anonymous]

Hi all,

I went through the pre-approval process today and need some advice from you guys.

I need to improve my credit from 612 to 620 to be approved for an FHA loan with down payment assistance.

But - the max amount I was told could be offered was $110,000 and that's with us paying off one $300 collection and $3000 down on my credit card (limit is $5500 - it is near 90% utilization).

My husband has a judgment against him and cannot be included on the loan. I make almost $39,000/year. Is there a way you know of to increase the loan amount? We're not looking for that much more - $130,000 was the number we wanted to be at.

Thanks!

[MissMia75]

I was always informed if a LO asked you to pay off any collections to go to another lender.

[ShanetheMortgageMan]

Like Mia says, not all lenders require collections to be paid.  A $300 collection, unless it's within the past 12 months and non-medical, should not be required to be paid with most lenders.

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.

Assets/Reserves.  This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).  Savings, checking, 401k, IRA, stocks, bonds, CD's, mutual funds, money market accounts, gift, etc. all can qualify.  If it is a pension or retirement account that does not permit you to withdraw or take a loan against (other than for hardship), and is only able to be used after you quit or retire, then it cannot be used as reserves.

Location.  What state & county.  City or zip if you want but usually that is not needed.  This is to determine FHA loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.

Property.  Is it a single family house, condo, townhome, 2-4 units, 5+ units, manufactured home, a co-op, condotel, the penthouse of a 45 story apartment building, suburban, rural, a lot of acres, a working farm, a gas station, etc.  Also the condition of the property is helpful, as lenders have certain minimum requirements properties must meet (working utilities, etc.).

Value.  For a purchase transaction, what is the home price range you are looking in, narrowed it down to, or are under contract for... and for a refinance transaction what is the appraised value of the home and when did you purchase your home.