Will we qualify for a mortgage?

[pat81]

Looking at buying a house with someone else who is not my spouse (no idea if that effects anything??). We were hoping to be able to qualify in January of 2015 to go house hunting shortly thereafter.

We are both first time home buyers (both never had a mortgage before), and are looking at properties with 20+ acres (have been told we wouldn't qualify for anything but a conventional loan with this property type).

Credit.  

Me:

EQ: 646 TU:784 EX: 671 - 
Both EQ and EX show a tax lien from 2006, as well as 2 collection accounts from 2005, thus the lower scores. I have gotten both of these items removed from TU thus my higher score there. EX only shows the tax lien, not the collection accounts. EQ hates me...

I only have 2 open accounts, Barclays with $1k limit and Cap1 with $300 limit. My utilization is under 1%. 1 paid in full account on an installment loan from 2007. No other debt.

Other:

TU: 720

There is a car loan for 30k from a year ago with monthly's of about $500. Utilization is under 1% on cards. There is a student loan with 1 late payment (past 90 days, went to collections before it was caught) with $2700 left on the loan (now current, collections was initiated October 2013).

4 open CC accounts, about 20k in limits.

Income.  

Me: Self Employed. $35k gross last year, $45k gross this year. There was no gap in my employment;, prior to being self employed I was an Industrial Rep making $70k per year.

Other: Full time employed for 4 years now, $65k per year.

Monthly debt payments.  $500 / month for the car. $71 / month Student loan.

Assets/Reserves.  $50k. We'd prefer to still have something left over, so assume $40k as the down payment.

Location.  PA

Value.  $300-$350k.
Occupancy.  Primary residence
Transaction Type. This will be a purchase.

A few questions: Should I be looking at taking hard inquires to try and get my credit limits up(I only have 2 hard inquires on my reports)? Should I be opening more accounts (Barclays is only 5mos old and I'm told they sometimes close accounts for this..) - my AAoA is 7 years.

Do we have enough money to put down to get a place in the price range we are looking at? Any advice is appreciated, this is a pretty daunting process..

[ShanetheMortgageMan]

No issue in buying a home with another person you are not married with, as long as you both occupy the home.  If the other person won't occupy the home then additional guidelines apply.

FHA, USDA, VA & conventional financing should all be fine for 20 acres.  It'll come down to if there are similar acreage comps, as well as if most of the value is in the dwelling or the land (when there is acreage involved, lenders don't like it when more than 30% of the value is attributed to land).

Is your tax lien still owing?  When did you open the Barclays & Cap1 accounts?

For self-employment, qualifying income is based on net income after expenses (adding back in depletion & depreciation), not the gross income.  A 2-year average will be taken, unless the most recent year is declining then the prior year will be thrown out and just the most recent year will be used.  So what was your net income on your 2012 & 2013 Schedule C's?

Is the $65k/year from the other person all salary?

Since your utilization is low, getting higher limits on your cards won't do much to your scores, underwriting doesn't really pay attention to the limits either.  If you haven't been using your Barclays card then use it, they normally only close accounts if they are dormant for a period of time.

[pat81]

Thanks for the reply.

We both will be occupying the home, so no issue there.

I'm not sure about the land vs dwelling valuation, I image that would be something to look at on a per-property basis, but good info to know going into things.

The tax lien has been satisfied (was $700) years ago, it just still shows up on my report. Cap 1 was opened in March 2011. Barclays was in May of 2014.

For my self employment, the numbers I gave are after expenses are included. 2012 was 72k (regular employment), 2013 was 35k. I assume 2013 and 2014 will be counted if I am applying in January and recently became self-employed? Or will it be 2012 and 2013's income?

The 65k is all salary currently. For last year and part of this year it was 55k salary and about 10k overtime, the salary got bumped up and the overtime removed currently.

I have been using the barclays card every month and just immediately paying it off, so seems I'm covered from that end. Does it make sense to apply for more accounts then wait 3 months after the applications to increase the number of accounts I have and hopefully get a bump on my scores?

[pat81]

Looking for any more insight we can get if someone has something else! Thanks for your time, it's sincerely appreciated.