So here's the situation: I'm 23 and made the mistake of getting into some bad credit card debt, mostly from struggling to find employment after college and also splurging on things. Lesson learned. I joined a debt management plan last October just in the nick of time and things have finally gotten better. I've secured stable work as a freelance IT professional and currently earn $2700 per month (that's a two month average; before that I was closer to $2000 but my pay has increased and I see no reason why it won't continue to climb).
My credit went bad due to a slew of late payments (I was dumb and had 10 credit cards) but is starting to improve. I'm current on all payments and have reduced my debt from $12,500 to $10,500 in 8 months of being on the plan. I've also recently paid off an orthodontics bill and am currently paying off the last of a debt to my college. I've finally started saving as well.
With all of that, I'm beginning to think ahead to my future. I live in MI, so our housing market is still very inexpensive. $150,000+ homes are going for $70,000-$80,000 in very nice areas. Currently, I live at home with my parents and we live in a high crime area. Not to mention, the house we live in has too many stairs for my parents, both of whom struggle with arthritis. My dad unfortunately has bad credit, while my mom does not get enough in retirement benefits to get a mortgage, even though her credit is good. Thus, if we want to get them out of this area, it's really up to me. And I have no problems with getting a mortgage and letting my parents live in the house for the rest of their lives. I figure that when I do marry (probably not for another 5-6 years) I will be able to get a house with my husband and can just continue making the payments on my house....and of course, when my parents do pass on (which I hope is not for a long long time) the house will still be mine and likely paid off by that point as my income looks to continue to increase in the future.
So, I'm looking at getting a mortgage sometime in mid-2014, maybe earlier in the year. These will be my circumstances:
* I'll have two years of tax returns from my freelancing. The first return will likely show about $25,000 in income; the second should show somewhere around $30,000-$38,000 in income--possibly more if I manage to raise my rates and retain clients.
* I'll have a $300 per month car note and pay $300 per month in student loans. No other debt as my plan is to pay the remaining $9500 off next year.
* I'll have a credit score somewhere around 620-670 and no charge offs on my record. Right now my credit score is 520 due to a number of 30 day lates from late last year, and a couple 60-120 day lates.
* I'll be looking to get a mortgage somewhere in the range of $80,000-$95,000. I will have probably close to a 5% down payment saved, maybe more.
* My mom may co-sign on the house if my income is insufficient; this would add about $700 per month income to the total.
Given this, do you think a FHA loan approval is a realistic possibility for me? Anything else I should do to make approval a lock?
