Mortgage Expert Advice Needed

[Anonymous]

OK my husband has been at his job for 3 1/2 years and makes an annual salary of 88,600. We have 0(zero) debt....not even a car payment. We have one secured card with a less than 10 percent balance, and an authorized user on two of my dad's cc'ds with absolutely gold pay history and always balances reporting of less than 10%. Scores are EX 629 EQ 646 and TU 656. There are 3 collections I was unsuccessful getting removed but they have zero balances. We are trying to finance a new house for 344,200 and we were told we qualify for the rural loan program. After reading these posts I am a lot nervous about those funds running out. My other concern is just getting approved. I feel like I have run a marathon to get to this point as our original scores were all around 500 in January! We do not have a lot in the bank due to paying off everything, but that will start building back up now. We have 8600 in 401K, but that is about it. I am hoping to get approval quickly so they can start building......am I dreaming? We have w'2's but our bank statements do not show a lot of money left over because we paid off everything. Any and all advice is greatly appreciated!

[Anonymous]

I could be wrong, but I have always heard that USDA is pretty tough on DTI standards.  That means 86K is not going to get you a 345K house more than likely.  The payment and interest would be roughly 1900.  Assuming 400 per month in taxes, 100 per month for insurance, zero PMI (since it is USDA), and zero HOA fees, you would be looking at a payment of roughly 2400 per month.   That would work out to roughly 32% mortgage debt (they usually want it under 29 I believe) and that is assuming taxes ar enot higher (in many areas they could be 2x that price), no HOA fees (which are fairly common in any developement), and 100 monthly insurance (again can vary greatly by area)

It is not impossible, but they are going to look very closely at any file that has, low FICO scores, low reserves, and asking for higher than normal DTI limits.

Also, yes, USDA may be running out of funds by the end of this month and unlike in the past, banks are not making loans in anticpation of later funding.  It is not a good time to take a risk on a USDA loan right nwo I would not think. 

[Anonymous]

We have already been told we can look up to 400k since we are in an amazing low tax area. It is just all the other stuff I am worried about.

[Anonymous]

Our DTI should be excellent! We do not owe anyone else....no car loans. The only credit card that we use we carry a 40.00 balance with a 500 limit.

[ShanetheMortgageMan]

Should be looking good - $88k/year = $7,333/mo.  On $345k @ let's say... 5.25%, P&I payment is going to be about $1,943/mo, throw in $75/mo for insurance, and $287/mo for taxes... that equals $2,305... which is only 31% of the gross income.  Since no other debt, that'd be your total debt ratio too.. and even with so-so credit that should be OK for USDA.