Mortgage Loans

[salsa34]

Here are the facts:

I make 45k/year and my spouse makes about 50k.  Last I checked, my FICO was 720.  It should rise further b/c I am paying off debt like crazy and expect to be debt free by May.  So. DTI will be $0 soon.

My hubby just got a green card and SSN in Sept. '08, so he has limited credit history.  He has a capitalone credit card that he is charging small amounts on and paying off every month and I am about to add him as a joint user on one of my credit cards in the hopes of increasing his score.

We would like to purchase a home in about 6 months and take advantage of the $8,000 credit.

Will I need to be able to qualify by myself or can my spouse establish decent credit in only 6 months?

Can a person making only 45k, but with good credit qualify for a $200k home?  There are not many homes worth buying in my area for less than $200k.

Once my cards are all paid off, do I need to keep charging small amounts on them to keep my FICO score up?

Thanks for the input!

[llecs]

Welcome to the forums!

My knowledge on mortgage lending is limited, but I think you have a good shot. By next month you should pull both FICO reports (TU and EQ) for both of you. Your DH should have scores by this month sometime, if not already (assuming he got the CapOne around Sept.). FICO will only issue a score if you have an open TL reporting for 6 months or longer. If no score, then perhaps you could add him as an AU on one of your cards. Given a good history, his scores will go up and the history gets transferred. If applying jointly, the lender will choose the lower of the two middle of the three scores between both of you.

You don't really need to carry balances on your cards to maintain a good FICO score. You can easily have scores in the 700s with $0 balances and no usage. Ideally for max points, let 1/2 of them report $0 and the other half report anywhere from $1 to 9% max. You can use them, just pay them down by the statement date.

[salsa34]

Thank you!  I guess the big question will be whether it is better to try to qualify by myself and possibly get a better rate on a lower value loan or incude hubby and have a higher interest rate, but qualify for more house.

Will adding him as an AU on one of my cards really help or does he need to be joint?

[mamasan]

Have you looked into USDA they take non-traditional credit. You may qualify, It depends on the area and your income.

[salsa34]

I apologize for being new and uneducated, but what does USDA stand for?  US dept of agriculture??  we live in an urban area.

Message Edited by salsa34 on 03-09-2009 09:04 AM

Message Edited by salsa34 on 03-09-2009 09:08 AM

[llecs]

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salsa34 wrote:

Thank you!  I guess the big question will be whether it is better to try to qualify by myself and possibly get a better rate on a lower value loan or incude hubby and have a higher interest rate, but qualify for more house.

Will adding him as an AU on one of my cards really help or does he need to be joint?

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You could always cross the bridge when you get there, but I bet he'd have scores well into the 600s by the time you are ready to app.

Adding him as an AU, not joint, will definitely help. All the history, good and bad, will appear on his CR. If you do it, then obviously choose a CC that is older than his CapOne and a currently opened CC that is free of lates, baddies, etc.

[salsa34]

But, if they will accept him as joint, is that better from a credit building standpoint?

[llecs]

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salsa34 wrote:
But, if they will accept him as joint, is that better from a credit building standpoint?

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There is no difference at all. Any AU account will report as if the account was his. Yes, it will say authorized user, but there's no problems, score-wise or under a manual review, with that.

[ladylpk74]

Salsa, I was able to qualify on my own making $45k a year for $165k. That was with $450 a month in debt. My lender said I would have easily qualified for a lot more if my dti would not have been so high. Pay down your debt and apply. You may have a shot at getting $200k on your income alone.

[salsa34]

Wow.  Thanks for the info!  Was that FHA or conventional or does it matter?