Will I be approved?

[Purrfection]

EQ: 640  TU: 645  EXP: Unknown

Laon Type: FHA

Income: 30K yearly ($2424 monthly)

Home Purchase Price: 144K

Downpayment: 15K

Reserves: $12K

Current Installment Debts: $0 (Student Loan payment will be $178 beginning in October)

Utilization about 30%

Baddies:

Most recent: 120- day late in Sept. 2010 on a Collection Agency Account (Midland), in which they only reported it as 120 days late when I disputed the account.

3 CO's (2007, 2003, and 2004)

Husband was originally going to go on the loan with me, but we are currently separated and headed for divorce. I will be going on the loan alone. Home is currently under construction with a completion of 2-28. As of right now, he still will be contributing to half the housing costs and utilities.

Does it look like I will be approved? I am concerned about the 120 day late.

[supercoupe91]

Wait for Shane or other experts for a more offical answer, but I have recently gone thru the FHA ringer and can tell you that I called 3 different companies for mortgage quotes. Two of them told me all collections had to be paid. Some will ignore collections up to 5k. How much is the balance on the collection?

[Purrfection]

The collection is for $789

[Anonymous]

How can you be at 30% utilization if you have no other debts besides the SL? 

What cards do you have reporting utilization and what are their payments.

Assuming I am misunderstanding something and you do have no other debts, then DTI is still going to be VERY tight.  Standard DTI allowances only allow for about 760 per month mortgage for you right now and about 1050 in total monthly debt.  The student loans mean that you will need even with an exception on the mortgage DTI levels, you are looking at about 975 in availalble debt left for mortgage.  Depending on taxes, insurance, and any HOA fees, that will be tough to squeeze into.  So, you are looking at needing exceptions to the DTI and exception to the 12 months clean credit general requirements.  The good news is that the reserves will help in that case and you are putting a decent amount down for the price of the house.  The bad news is your scores are at the absolute minimum, DTI is at best going to be maxed out with housing over guidelines, but more than likely over both front and back end guidelines.  The fact that you are divorcing but your husband is going to help out for a bit will not do anything for you.  Also, if you are in a community property state, all his debt will still be counted toawrds your DTI.  IF not that won't matter.

It is very iffy at the moment.  You may get approved and you may not.  ALot depends on how the actual DTI numbers look.  IF taxes/insurance are pretty high there you could be pushing 50% DTI pretty quickly and that would be unlikely to get approved with a recent late as well.  Your basic monthly payment and interest is going to come in at around 750, but them you have PMI, insurance, taxes, and any HOA fees that all get added in and applied towards DTI.  How much are the expected taxes and insurance per month?

[Purrfection]

How can you be at 30% utilization if you have no other debts besides the SL? 

I should have clarified by saying no other installment debts.

What cards do you have reporting utilization and what are their payments.

My revolving debts on my three CCs were paid off this month, but aren't reporting a 0 balance yet.  Reporting balances were $46, $249, and $173.

Assuming I am misunderstanding something and you do have no other debts, then DTI is still going to be VERY tight.  Standard DTI allowances only allow for about 760 per month mortgage for you right now and about 1050 in total monthly debt.  The student loans mean that you will need even with an exception on the mortgage DTI levels, you are looking at about 975 in availalble debt left for mortgage.  Depending on taxes, insurance, and any HOA fees, that will be tough to squeeze into.  So, you are looking at needing exceptions to the DTI and exception to the 12 months clean credit general requirements.  The good news is that the reserves will help in that case and you are putting a decent amount down for the price of the house.  The bad news is your scores are at the absolute minimum, DTI is at best going to be maxed out with housing over guidelines, but more than likely over both front and back end guidelines.  The fact that you are divorcing but your husband is going to help out for a bit will not do anything for you.  Also, if you are in a community property state, all his debt will still be counted toawrds your DTI.  IF not that won't matter.

It is very iffy at the moment.  You may get approved and you may not.  ALot depends on how the actual DTI numbers look.  IF taxes/insurance are pretty high there you could be pushing 50% DTI pretty quickly and that would be unlikely to get approved with a recent late as well.  Your basic monthly payment and interest is going to come in at around 750, but them you have PMI, insurance, taxes, and any HOA fees that all get added in and applied towards DTI.  How much are the expected taxes and insurance per month?

[Anonymous]

makes sense now.  DTI is still likely to be an issue as well as the late and will require exceptions to the norms which is still up to the UW, but if the FICo takes a decent jump (if you can get into the 660-680 range and still have the 12K reserves, you may be able to get approval a bit easier.  The key here is also should you?  Can you afford over half of your take home pay to go to just mortgage?  That is a decision for you to make obviously.  With a high income, it is nto as big a deal as the left over % allows for more room to manuevar, but at 30K and 12-15K of that going to mortgage very year, it is a risky gamble.  Good luck with it.

[ShanetheMortgageMan]

The collection is considered when it was sold to the collection agency, unless it can be tied to the original account on the credit report, in that situation it would go by the last date of delinquency on the original account.  So while Midland probably really messed with your scores by reporting a new 120 day late, and it will even trick the lenders automated underwriting system into thinking it's a fresh delinquency, a human being underwriter will see that it's a collection from before then and won't consider it as recent.

The 3 charge-offs are from long ago... but are they still owing?  If not, then shouldn't be any issue at all.  If they are owing, then the amounts would need to be considered.  When it comes to having to pay delinquent debt it's an underwriters call.  With FHA financing, larger balances, accounts from banks and credit card companies, and housing related items are sometimes required to be paid.

I know you didn't ask about this part... but if I was you I'd pay all of the bills myself, and then ask your soon-to-be ex to reimburse you, so you get the feeling of what it is like to pay everything from your own income in case for whatever reason his income isn't there.