Loan Qualification

[Home2014]

I'm aiming to get pre-approved and make a purchase this fall. Here are my stats. One looming question is whether to include my husband on the loan. His income gives us much more buying power in an area where homes are expensive, but his credit took a hit last year during a period of having to cover expenses while I was unemployed.

Credit: MyFico Equifax is 677. I don't know my EX score.  No baddies on EQ or EX. TU score is much lower (bw 625 and 635) because there is one collection on there for $200 (unpaid parking ticket). High credit card utilization (50%) is also factor. I've sock drawered cards and am paying down the debt.

My husband's scores are in the low 600s. He has one charge off, one closed CC account which he's been making timely payments on for the past 6 months, and one card account in good standing. I believe he also has a 30 day late car payment that's about a year old.

Income.  My income is just over 100K and husband's is around 60K.

Source of income.  Both incomes are salaries.

Monthly debt payments.  My monthly payments are toward credit cards (min obligation is around $200) and student loans. The student loan debt is high and isn't in repayment at the moment because I just consolidated and applied for IBR. IBR monthly should be around $350 if approved.  Husband has a $250 car payment, $600 child support, and the monthly cc payments of about $200.

Employment..  I have a year of full-time, salaried employment after a period of 6 months unemployed. Prior to that 6 months of unemployment, I had no breaks in employment for at least 6 years.  I have a graduate degree (2007) and a professional degree (2011).  My husband has been employed by the federal government full-time for about 7 years.

Assets/Reserves.  I have about 2K in my savings plan that permits borrowing. My husband has about 15K in his retirement savings (also permits borrowing). We have no other assets.

Location.  We are looking in Montgomery County in Maryland. The lowest priced 3BR for sale in our current zip code is around 700K. We are looking to move outside this zip code but stay in the southeastern part of the county near DC.

Property.  Seeking a single family home with at least 3BR, basement, and some greenspace in the back. Also considering townhomes for location trade offs.

Value.  This will largely depend on whether I apply for the loan alone or with my husband. It would be much easier to find a home in the 450-500K range with his income as a factor. If including him on the loan lessens the chances of approval or a decent rate, I think we'd be stuck in the $350-400K range based on my income alone.

Occupancy.  Primary residence

Transaction Type. Purchase

Thanks for reading and I value any and all feedback! Also, I recently attended a NACA workshop but havent starting submitting paperwork to them. I'm not sure waiting out the process and dealing with the purchase caps will be our best option. Any thoughts/feedback on NACA are appreciated as well.

[Home2014]

Bumping this. Hoping to get some feedback.

[jhutt50]

I would add your husband to the loan to give you more buying power.  You aren't going to get significantly better rates with just you on the loan.  Based on reserves and the amount your trying to borrow, and credit scores you will need to go FHA.  There are lenders out there who will go as low as 580 credit score for FHA loans.

[Home2014]

Thanks so much for responding!

[Workingonme0381]

NACA is a good program, given that it is no money down and no closing costs, however, one thing they do say is that if you are married and your spouse lives with you, it is not optional on putting them on the loan. I live near DC as well and they have a big event coming up next week, if you haven't already bought/found a home.

[Home2014]

Thanks for your feedback. I've started working with someone from NACA using information for my husband and I. So far, so good. We're still feeding information.

Please keep me posted after you attend the event in DC.

[ShanetheMortgageMan]

With your income alone $500k is probably going to be the very upper end of your limit if using FHA financing (your housing ratio would be right against the max of 46.99%), $450k would be more comfortable and would bring the ratios down to about 43/48% which should have no trouble qualifying.  Adding your husband's $60k/year of income would drop the housing ratio by about 17%, and the total debt ratio by about 12%... but may not be necessary.  You can always try to get pre-approved with just you or both of you, and if it doesn't work out then try the other way.

Since you've been back on the job for at least 6 months then your employment should be fine to qualify with. 

Down payment/closing costs may be where you'd have a tough time, as 3.5% down on $500k is $17,500 alone... so I'd recommend you start building up your savings to cover the down payment & any closing costs and still give yourself some rainy day funds/reserves. 

If NACA works out then that would be a great option, but it appears you could have FHA as a plan B.