02-18-2009 08:47 PM
Hello everyone. I'm interested in getting approved for a USDA loan because my mortgage broker told me that the house that I'm interested in iis located in a rural area. I'm a first time home buyer and I hope I can qualify. Here's my information below:
Mid Fico 660
1 30 day late 10 months ago
I have a family of 5.
15 months of income verification. I'm 1099.
Monthly debt of $730
What's my chances of being approved? If so, How much house could I possibly afford? I live out here in California and the prices are pretty high as you might know.
Any help would be greatly, appreciated.
02-18-2009 08:54 PM
Where in Ca, how much are the taxes yearly, and what price range are you looking for.
From what I see, as far at DTI goes you could get up to about 2850 in debts per month or so.
With 730 in other debt ( i am assuming student loans/car loans/credit cards), that would leave around 2100 available for mortgage. That is pretty tight in alot of areas of Ca but doable in many areas of Ca (I know, I live in Temecula, ca)
The real issue will be the 15 months of 1099. they will want to see w-2 for the last 2 years and depending upon your tax status (writeoffs, etc) that could be problematic. Also, they like to see 2 full years but since you will have 2 w-2's that might not be a problem, especially if you came from that field as a regular employee and then went to 1099 pay.
02-18-2009 08:55 PM
Also, you are probbaly looking at the low 200's as far as max price to keep under DTI limits. Not sure though how all this applies to USDA>
02-18-2009 09:33 PM
02-18-2009 10:18 PM
I'm looking for a house in a town called Mountain House, California. It's a new town that's been around for about 8 years (Close to Tracy, CA). The price on the house I'm looking at is $379K. I do fall under the income limits for USDA which is $90K for a family of five. I have about 10K in my Savings Account (As of this Friday). Last year I received a promotion at my job that bumped me up to 80K. The year before I was only making around 30K. I want to use my higher income from last year and the beginning of 2009 because of the housing costs out here in California. Any thoughts?
02-18-2009 10:21 PM
02-18-2009 10:36 PM
02-19-2009 02:16 AM
Property taxes may be a little bit more than that. That is what the flat rate will run, but most communities in Cali (in particular newere ones) have special assesments that you have to add on to that. For example I am in what is considered alow tax area and I pay about 422 per month on a 320K purchase.
I am not sure of the exact limits for DTI for USDA, but I think they are at least close to FHA and if that is the case you are going to be quite a bit shy of 379K purchase. Even with 20K down, a rate buy down to 4% and no PMI with USDA, and paying all your closing costs upfront (not rolling them into the loan like USDA lets you do), you wuld be looking at this:
75 insurance ( I will assume no HOA's but if there are, those would be counted to)
2243.00 total payment
730 monthly debt
2973.00 debt. vs 6667 monthly income = 44.6% DTI
And that would end up being over 30K out of pocket to get it that low.
On top of that , they may have issues if your pay jumped from 30K to 80K on a 1099 job. In alot of those cases they want to average the last 2 years income to get a number that is consistent with history.
Is there any way to get some of the monthly debt paid off prior to buying (CC's or a car laon or something...)
Again, this is all coming from more of an FHA situation, but alot of the standards are similiar form what I understand.
Hopefully someone more involved with USDA will chime in.
02-19-2009 06:05 AM
I don't know whether the ratios vary by state, but here in Maine I was told by a mortgage broker that, for the USDA Rural Guaranteed Loan program, they use PITI to income = 28% for max. mtg payment, and total debt to income = 36% for max. debt payment (i.e., debt reported on CR, not utilities, rent, etc.--not sure whether that also includes mortgage).
Hope this helps.
02-19-2009 04:02 PM
I've heard that PITI to income can be up to 31% on new construction for max mtg payment and total debt to income can be over 50% with compensating factors. My mid fico is 660 right now but should be hopefully 680 in a couple of weeks. Based on the USDA PITI and total debt to income ratios what type of house could I possibly qualify for? Also just found out with the USDA guarantee loan, you can't buy down the rate.
Any input would be greatly appreciated.