Past bankruptcy and low income...can I get a mortgage?

[abiso]

I declared bankruptcy nearly 4 years ago, so that's still on my credit, and my credit's not extremely hot, though we haven't had any delinquencies in several years. We have open credit cards and low debt. But our income is very low. We're students and our financial aid helps with housing costs, but that doesn't show up on our income, so I know a lender is going to think we don't make enough to buy a house. If we can wrap most or all of the closing costs into the mortgage, I'll have a 3% down payment. Anyone know what my options might be?

Message Edited by abiso on 03-31-2008 05:12 PM

[abiso]

Maybe it would help if I give some figures...

My credit score is at 579 right now. I have 3 credit cards, all current. The balances are high, but we will be paying them off completely before applying for a loan. My husband's credit score is higher than mine, but I don't remember the number at the moment. We declared bankruptcy in 2004. The discharge is obviously still showing up on our credit reports, as well as charge-offs, etc. But there have been no delinquent accounts since 2004 or early 2005. I did have a foreclosure in 2004, so I know that won't help.

Our income for 2007 was $21,000. I know, it's not much. Like I said, though, we get financial aid that helps us with expenses, so we can afford more than it appears we can. We have no car payments or anything other than insurance, etc.

I'm hoping to get a loan for between $100,000 and $115,000, but I'm nervous that this won't be possible. I just really want to make this happen because we're paying so much for rent and I just know we could be in our own house instead.

Thank you for ANY help!!

[Junejer]

Hi abiso, welcome to the forum. I hope that you are reading and learning all that you can on this incredible site.

My opinion would be that it is going to be difficult to qualify past the $21,000 income, b/c the financial aid isn't permanent. How much longer are you going to receive the aid? Is it quantifiable? Shane or someone else with direct experience here can probably answer better (I am admittedly coming from a perspective of commercial lender).

[abiso]

I'll be receiving aid for about 2 1/2 more years. I can document how much I get per year, but I don't know if that would qualify as income to a lender.

When we got a mortgage 4 years ago (which I wish I hadn't done!!), I know that they didn't look at income. I know that did give us a higher interest rate, though. My husband has worked with his company for over 2 years, and I've been with mine for over a year and a half. He did get a raise at the end of last year, so he'll make more this year than last.

[Junejer]

I wish that I could be more definitive for you, but my gut just says probably not on the financial aid. Gee, I really hope that I am wrong though. It never ceases to amaze me as to what some of these programs might accept. Have you spoken with a mortgage broker yet?

[Anonymous]

I asked my lender about this. Fin aid cannot be used to calculate income. Fin aid is for school regardless of how you decide to spend it.

[abiso]

Thanks...I assumed it wouldn't count as income, but of course I hoped it might! I haven't yet talked with a broker. I'll be doing that this summer after paying off my credit cards. Hopefully they'll dig and find something for me.

[kunphuzn]

I'm sorry but I cannot help but respond here.  I promise, my intent is not to flame anybody but I cannot possibly imagine why you would think you should get a mortgage.  You make an extremely low income, have a fairly recent bankruptcy (and you didnt say, but you allude to the fact that you lost the first house, perhaps you sold it, it was not clear to me).

The government (i.e. Joe Taxpayer = ME!!) continues to bail out corporate lenders, who everybody says are predatory and in some cases, may have been, but come on people, 50% of the blame for the mortgage meltdown has to be placed on irresponsible borrowers!!!  Some people simply should rent rather than buy.

Ma'am, my advice to you is to not attempt to strap yourself with a 30 year mortgage at this point in time but to continue renting, going to school and use that education to increase your salary.  In a couple years, when (and IF) you are financially ready for the single largest investment most of us will ever make, then at that time look into purchasing a home.

I think shame on anyone who would encourage someone who is already receiving financial aid and making <30K annually as a household income to get a mortgage

[Junejer]

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@kunphuzn wrote:

I'm sorry but I cannot help but respond here.  I promise, my intent is not to flame anybody but I cannot possibly imagine why you would think you should get a mortgage.  You make an extremely low income, have a fairly recent bankruptcy (and you didnt say, but you allude to the fact that you lost the first house, perhaps you sold it, it was not clear to me).

The government (i.e. Joe Taxpayer = ME!!) continues to bail out corporate lenders, who everybody says are predatory and in some cases, may have been, but come on people, 50% of the blame for the mortgage meltdown has to be placed on irresponsible borrowers!!!  Some people simply should rent rather than buy.

Ma'am, my advice to you is to not attempt to strap yourself with a 30 year mortgage at this point in time but to continue renting, going to school and use that education to increase your salary.  In a couple years, when (and IF) you are financially ready for the single largest investment most of us will ever make, then at that time look into purchasing a home.

I think shame on anyone who would encourage someone who is already receiving financial aid and making <30K annually as a household income to get a mortgage

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kunphuzn, though it wasn't your intent to flame on anyone, that is precisely what you did, IMO. According to your post, you don't think that people with low income should own a home at all. I think that's nuts. I know many people who are low income who own their homes, keep up with the payments, take pride in their homes (although they are not expensive homes). Why you assume that b/c their income is lower that they are less responsible, I don't know. The members on this board come here for advice and support. There are a myriad of reasons why people wind up in financial crises, not the least of which is irresponsibility. But let's not assume that is the only reason: Illness, loss of job, death of a spouse, etc.

While you are welcome to express your opinion, please refrain from negative editorialism.

[abiso]

You don't know my situation, so I don't see how you can judge me...yes, I did get a loan 4 years ago that I wasn't ready for. I was 20 years old and taken advantage of by an unethical mortgage broker, but most of the blame falls on me. I take credit for that, and I regret it. I've also learned from my mistakes, and I am on a good path to make a good life for myself. I had no intention of buying any time soon until I discovered that I could easily own a home for much less than I could rent one. I've also been working -- hard -- since the age of 15, and while I don't want to be a burden on society, I've been a contributing taxpayer for much of my life. So please don't judge. You don't know me or my life.