Starting the process. Trying for USDA, but seems like options are limited to none for me

[Tubelo]

Hello! I've just begun the great task of trying to qualify for a home loan and my head is spinning in circles trying to fit between all the loops and hoops of eligibility and qualification. Here's a run down of the basics as requested by the "Info that is needed" thread. 

1. Mortgage Credit Scores:  EQ (678), TRANS (687), EX (657)

2. Credit Negatives: NONE

3. Gross Income: $56,343 (2016)

4. Source of income: Full Time W2 (3,000/mo - 14yrs) + Self Employed (1,600/mo - 5yrs)

5. Monthly debt payments: My minimum monthly payments total $874 (credit cards) - I DO NOT have auto loan, student loan etc.

6. Employment: Full Time W2 (3,000/mo - 14yrs) + Self Employed (1,600/mo - 5yrs)

7. Assets/Reserves: < $5,000 Checking - Spent the last 5 years paying off over $30K in debts so don't have much left over. 

8. Location: Davenport, FL

9. Property Description: Condo (New Construction - 1 building w/4 units)

10. Property Value: approx $220,000

11. Occupancy: Primary Residence 

12. Transaction Type: Purchase/First Time Homebuyer

13. Other: I currently rent @ $1,650/mo and the rent is expected to increase to about $1,700 once my lease is up in July. Very doable amount for me, I just would rather pay that amount towards my *own* home. 

14. Misc: I don't have much to put down on my own, but do have parents and a fiance who will be giving me the 5% I need to put down (per the seller/builder) and any additional monies for closing costs etc. 

I am currently speaking to a LO about getting qualified/approved for USDA loan, and obviously as you can see above, my DTI is high. He is currently trying to get a waiver to NOT include (and average) my 2015 self employment income with 2016, since it was $2K vs 19K, and I have provided proof that the increase will remain going forward. But alas, that still doesn't do me much justice in the DTI department. 

From what he has gathered on the property, he estimates my monthly payment to be $1,727.00, and that includes the HOA, taxes, insurance, PMI, etc. Now that is not a big payment shock for me since it would only be a less than $100 increase (same as it would be once my rent goes up this year if I renew), so I have no issue handling the payment. I don't spend money on nonsense, I put all my income to debts/rent, I have no dependants (kids), and know how to budget for all my bills, including "surprises/emergencies". I also work from home and I'm always looking for ways to increase income. 

Where do I stand when it comes to the USDA, or any loan for that matter? I feel like my DTI is really limiting my options here, but like I said, I have been paying 1650 for 2 and a half years now and still able to pay all my bills and live VERY comfortably. It's like, I know I can do it, but the paperwork says otherwise. 

I'm trying to qualify on my own, but if I must I'm willing to do co-borrowing with my fiance as well. He has no baddies/negatives on his credit is above 670 credit score-wise, and his 2015 and 2016 income was 22K and 73K respectively. (Self Employed) His monthly debt obligations are 700/mo and he has 25K in reserves in a savings account. 

Is there any way for me to include his income, but not the debt? Is there anything I (or we) can qualify for considering I have a proven history of being able to afford this price range? I just feel like there are no options for me and I really want to make a move on this property before it's too late. 

Any advice, or help is appreciated. 

[krielly]

Those cc payments (Ouch!) are really killing your DTI. Depending on your Utilization (which I assume is high), they are likely really hurting your credit score as well.

You mention you have no car payment, but I am assuming you will need one at some point during the next few years. You say you are comfortable with your payments for now, but what happens when you have to add other debt on top of what you have? A car payment, housing repairs, etc.. Paying a mortgage is pretty easy, it's the extra unexpected maintenance and repairs on the home that can sink you if your budget is tight.

Not trying to be a downer, but I would focus on getting those cards paid down substantially before purchasing a home. JMHO

With regards to adding a co-signor, you cannot add income of another person without including their debt.

K

[Tubelo]

Thanks for the response Krielly! 

Yes utilization is at 38% I believe. I actually just paid off my 28K car loan yesterday! With less than 30K miles (I don't drive much) and all the care I give it (just put new tires and brakes 5 months ago), I won't need a car anytime soon (That was also an additional $500 monthly payment I will no longer have, and I was still able to have a 1,650 rent payment.)

I also just paid off two more credit cards, and I'm trying to pay off as much as I can since my income is literally paying debts now. I get what you're saying, because it makes sense that I shouldn't be able to afford such a payment, but I know I can handle it. 

I just fear this property won't be therr for long and I don't want to miss my chance! What person would want to pay 1,700 a month to rent when they can own for the same price. Doesn't my ability to pay all my debts for the last 2 years count for anything? It is very frustrating to say the least. 

[Anonymous]

You can find the handbooks USDA guaranteed loans at rd.USDA.gov. Lenders use these handbooks plus whatever overlays they might have. USDA loans have a DTI max of 29 front end and 41 backend. What is your loan officer saying about your DTI?

USDA is less about credit history and all about your willingness AND ability to pay.

[Anonymous]

Also all income from all household members is to be included whether related or not or on the loan or not in order to check your household eligibility for this low to moderate income loan.