My scores are up now.... and realtor is talking USDA but what are my chances?

[alleycat1975]

I finally have my scores up to where i can qualify for something..  but need to start saving my down payment.   However my realtor mentions yesterday FHA and USDA loans. 

The Lender just pulled my scores and hasen't looked at my report yet but I'm going to guess my next problem is a high debt to income ratio..  Anyone care to take guesses here?

Revolving:  1 Cap One 500 limit 0 balance (yay me)   1 Household bank 300 limit 170 balance that will be paid in full at reporting so next month will have  a 0 balance.  The killer now:  Global Vacation Network, sort of like a time share i guess.. that has 4100 owed on it.. I think it said the high balance was like 5200.  total revolving balance: @ $4100

Installment:  1 car 22,000   1 student loan 10,000  1 personal loan 1,500   Total Installment Balance @ $34,000

Income is about 50K.. 

When i do the calculations I have about  $724  in payments per month and a Gross income of 3800 (net 1880) 

I really don't have a figure for house purchase amount....   at this point, a box with heat and air con works for me LOL 

How bad does this look?

[ShanetheMortgageMan]

Is your income $50k or more like $45k?   $50k/year is $4,166/mo.  $3,800/mo is $45,600/year.  Makes a bit of a difference.

Is that all salary?  Or also some OT, bonus, commissions, etc.?

Do you mean you net $2,880/mo... or that you actually only net $1,880/mo?  

[alleycat1975]

Sorry I didn't realize my mistakes until I looked at my paystub at work. I am salary. No overtime or bonuses. 50k is supposed to be my gross salary this year and of course now im not near my paystub but jan 1 thats what i was told my salary was with this years raise lol. My total payments on debt that is not rent is that $7## figure I first posted. I pay 700 in rent too. I hope that clears some of my rambling up lol.

[ShanetheMortgageMan]

If property taxes are modest in your area, for example $1,815/year for a $145k sales price, then with a USDA loan that would be about where your approval level would cap out, as USDA loans prefer no more than a 29% housing ratio and 41% total debt ratio.

On a $145k sales price you could estimate the housing payment to be around $1,010/mo.   That would be 24% of your gross monthly income, so your housing ratio is under the 29%.  When you throw in $724/mo in other expenses it brings your total debt ratio to 41.5%, so right at the limit.  

FHA is more lenient, but requires a 3.5% down payment (vs. USDA doesn't require any), and has monthly mortgage insurance.  So that same home, with 3.5% down and FHA financing, would have a $1,070/mo payment.  FHA allows higher debt ratios, 31/43%, but higher than that routinely qualifies, so potentially you could qualify for more than $145k with FHA financing once you have the down payment saved up (or you can also get a gift from family/relatives).

[alleycat1975]

Thanks! Taxes aren't bad out here depending on school district of course. Plus im hoping to go less than 143 on purchase price. Im actually going to shoot for 120 or lower. Our housing market really crapped out so it truely is a buyers market here in ohio. Thanks for the input.

[ShanetheMortgageMan]

You are welcome.  Taxes can actually be quite high for the sales price in Ohio, all depending on where the property is.  But if you aim for $120k or less then you should have some wiggle room on the taxes.