Starting to wonder if I will be approved to buy a condo

[weathergirl77]

My lease is up the end of next May and I want to buy a condo that will be in the $68,000-$73,000 range.  I have a bankruptcy from 2003 but have not had any late payments ever even before the bankruptcy.  My FICO scores are 700 Equifax and 711 Transunion but I don't know about Experian.  My income is $27,000 a year and I have credit card debt of $4,500 but have no car payment.  I pay $735 for rent and pay all utilities and have never been late on anything. I will take out a loan on my 401K to have 3% down for a FHA or SONYMA loan.  I will only have $2,000 in the bank after all is set and done and I am starting think I will not get approved for a loan with so little in the bank and the credit card debt. 

Do I have a chance of getting approved?  For many reason I need to move next year and I am semi handicapped and I will get a lot more assistance being in my own condo but of course I need to think of my future and being in my 40's and alone the rest of my life I need to have some finacial security.

Thank you for all your replies.

[HelpAppreciated]

Hi Weathergirl,

I don't have enough knowledge to give advice but I just wanted to say...all things are possible.  There are some great loan officers on this board that could provide great guidance.  If I could get pre-approved with a 607 mid score,  I know your scores are good enough to get approved.

[weathergirl77]

Thank you for your response HelpAppreciated.  I guess I am not worried about my FICO scores but more that I have $4,500 in credit card debt (I forgot to mention I have not charged anything for a month now and I am not going to charge anything for the next 3 months before I start looking and to get approved) and only having $2,000 in the bank with only 3% down.  I am very good with money but because of hard times and the credit card debt it does not reflect I am good with money and I hate that fact. 

[rockymtngrl]

How much are your monthly credit card payments? Do you have any other monthly debt, like car, student loan etc.?

FHA requires 3.5% down plus closing costs, although its possible you could negotiate the seller to pay some or all of your closing costs.

[weathergirl77]

My credit card payments are about $175/mo min but I am paying more to get them down.  I actually might have the debt down to about $3,800 when I apply for the loan.  If I go through SONYMA for a loan they have a closing cost assistance program and you can put down 3% for a downpayment.  I do not have a car payment or any other debt besides the credit cards.

[hawkeye33]

Well, one option that allows you to do more with little in the bank, depending on where you live, would be the USDA program. I'm not sure if USDA has any limitations on not doing anything with condos, but generally speaking, areas where the population is 10K or less can qualify for those programs. Based on your income, you should definitely qualify for their USDA Direct program if you found a property that qualifies within your area.

Your scores should be completely fine. I'm not overly familary with the BKs, but from what I've read, I would think it's been plenty long enough, especially with good history since. Your biggest concern is probably debt to income ratio to determine what you can afford. With your income, and if my math is correct (which can be somewhat of a big 'if' sometimes), for FHA or USDA (which are typically 29% PITI and 41% total DTI), you could afford a condo payment of $652 per month ($27000 / 12 months =  $2250 monthly gross income * 29% = $652 PITI).

After that, it's just a matter of shopping for the right place and the right lender. I was in your boat for quite a while, not wanting to do anything because I didn't know how it would turn out. And, like everyone else, I discovered that we'll never know until we put the first foot forward. Good luck.

[ShanetheMortgageMan]

If you are able to keep the $2k in your bank after closing (meaning not use it for the purchase transaction) then even with your slightly high housing debt ratio of 35% I'd say you'd have a very good chance of qualifying.  Your total debt ratio (when you factor in the credit card minimum payments) is about 43%, so that is just fine. These were figures using a $75k sales price with a $200/mo HOA fee, 2.5% property tax rate.