Mortgage qualification

[Anonymous]

Hello experts help me evaluate my position for a new mortgage,

Here is my situation.

1. Worked for two and half years and took break for about a year, rejoined another company in oct/2010(working for 3 months now).
2. Salary in 90k/year range.
3. Credit score around 760(fako)
4. My name is the deed but not in the mortgage for the house we live. Mortgage is only on my spouse name.
5. Two credit card accounts (as a secondary account holder) with zero debt.
6. Car loan paid.
7. Savings in the bank around 30K(only my name).
8. All the expenses coved my spouse salary. 

My questions are,

1. Will I qualify for a mortgage based solely on my income if we want to by another house(price approx:450K)?
2. Can I use that as my primary resident if I remove my name from the exiting deed?
3. Will I qualify for the 3% only down FHA loan?

Thanks for your help in advance.

[ShanetheMortgageMan]

What was the reason for the 1 year employment gap?   Is the company you are working for now the same type of business/industry as you were working in before?

If your name is on the deed, even though the mortgage is not in your name, it'll still be included in your debt to income ratio.  If you were planning on being removed from the deed, then after you are removed it wouldn't be included in your debt to income ratio since your name is not on the mortgage.

What will happen to the current/old home you now live in, after you buy the new home?

What do you mean by "all the expenses [covered by] my spouse salary"?  Do you mean just normal everyday living expenses like utilities, food, etc?  Or are you talking about monthly minimum payments on credit cards, student loans, etc.?

Why don't you and your husband want to qualify for the new purchase together?

[Anonymous]

Thanks for your reply Shane. Please find my response below.

Child birth was the reason to quit my job. I am working similar kind (same business/industry) of job, then I was making around 80k/year, so it is better job now.

We are planning to rent out the current home as it became small for our family (Tried remodel, couldn't do it because of city limitations/budget/economical sense)

If I remove my name from dead, is there a time limit I should wait before applying for the mortgage?

All the expenses including day to day, credit card, mortgage, car loan and child care.

We just want to protect us from any unfortunate situation like any one of us loosing job and subsequently loosing home and screwing up both of our credit history.

I think this is just as a precaution.

[ShanetheMortgageMan]

Child birth/raising a child is a commonly accepted reason for having an employment gap, and as long as you are back on the job for 6 months then usually you'll have no problem using it's income to qualify.

If you have no debts, then you should be able to remove yourself from title and then purchase a $450k home with FHA financing... as your debt ratio would be high, about 43% (that is for both the housing & total debt ratio, and assuming a California like tax-rate) but with excellent credit scores and a good amount of reserves after closing you should be able to get approved.  You'd just need to be removed from the title prior to putting in your application, so you can truthfully answer that you do not own any real estate.

You will have to explain where you've been living, and that you intend to rent out the old home after buying the new home.  An underwriter may want to know about your husbands income & other payments to make sure that as a family you aren't getting way over your head.

Where do you live?  If you live in a community property state (Arizona, Nevada, California, New Mexico, Idaho, Washington, Louisiana, Wisconsin and Texas) then with an FHA loan you also will have to include your spouse's debt payments into your own debt to income ratio, and then your income wouldn't be enough to qualify when the existing mortgage, credit cards & car loan are added.  Lastly, have you checked to see if your county's FHA loan limit would go up to what you are looking to borrow?  You can check at https://entp.hud.gov/idapp/html/hicostlook.cfm

[Anonymous]

Thanks Shane.

I live in WA, I guess that puts me out of FHA qualification as I have to include existing (spouse’s) mortgage in my calculation.

Good news is I can apply within two, there months for conventional, right?

[ShanetheMortgageMan]

Yes, that'd throw out the idea of using FHA financing and you'd just have to concentrate on qualifying for conventional... but with that low of a down payment your employment history may be a little tough to qualify.  Lenders would likely be OK with it, however with less than 20% down with conventional financing, there is mortgage insurance, and the mortgage insurance providers usually require 2 years of employment.  What we do in those situations is call up the mortgage insurance provider and run the situation by their underwriting department, then we know if our underwriter is OK with it then we won't have an issue getting mortgage insurance at the end of the loan process.  With 5-10% down and conventional financing, your debt ratio should be OK as well.