Will we qualify?

[wantingmore1]

My girlfriend and I are looking to purchase a home together but I am afraid to apply if we do not have good chances of qualifying at the moment. I am looking to get a pre-approval within the next month if our situation looks okay to get approved.

Income: I am a W-2 employee- 2013 earnings were 50k. Employed at same employer for 7 years (39k annually) for one and 4 years (11k annually) for the other.

             My girlfriend is a W-2 employee- 2013 earnings were 35k. Employed for this employer for a little over 2 years.

Property: Will be used as primary residence- first time buyers. Looking in Butte County, CA. We do not want purchase price to exceed 200k although, not sure what we would be eligible for in terms of loan amount.

Reserves: We want to put 5% down, not to exceed $10k. We only have about 18k in savings but do not want to use it all for down payment. We also have about 12k in retirement accounts but we also do not want to touch that.

DTI: Front end ratio is about 7% (about $600/month for all cc, installment loans). This includes a student loan payment amount my girlfriend has but is not currently paying due to being in deferred status (repayment may begin 03/2015). Back end ratio, if mortgage amount including PMI, insurance, taxes are calculated correctly for a mortgage of about $189k, is around 27%.

Loan type: Unsure- I am wanting to look conventional first (hence the 5% down payment), but am also willing to look at FHA. I don't believe USDA is available in the areas we are looking. This would be for a 30-yr fixed loan.

Credit: I don't have exact current scores. Based on when I checked around 12/13, TU was 661, EX was 630 and EQ was 670. Girlfriend's was TU 680, EX 687, EQ 680. Credit history wise- mine is fairly new. Oldest account is about 2.5 years, AAOA is 1 year. I have no negative accounts but I do have high utilization- about 59%. GF has several derogatory though. She has some lates - about 7 total from around 2007-2008. She also has one unpaid collection totaling $1000 from 2008. Her oldest account is 11 years, AA0A is 6 years.

I forgot to mention also- currently, my girlfriend gives me cash to deposit in my account for our rent, bills, etc. This makes cash deposits in my account about $1500/month. Will this be an issue?

If I need additional information, please let me know. Please also provide feedback regarding how to better my chances of getting approved or what kind of loans I should be looking for. Thank you in advance for your advices.

[BrianB_The_Loan_Professor]

Welcome to the forum - we are from the same part of the country - I grew up in Yuba City - 

Looking at your scenario it sounds like you should be fine - The scores are high enough that you will qualify for either loan program

You are wise to being open to FHA - the issue with conventional is the pricing is a little higher than FHA and is based on credit scores - Your scores will get the best rates available from FHA but will be on the higher end with conventional

A good Loan Officer will present both options so you can do a side by side comparison

The student loan payment will need to be included in either loan - FHA allows it to be omitted if there is a 12 month deferment but you will be under the 12 months by the time you get a loan - your dti calculations show you have room so it shouldnt be an issue

As far as the checking accounts - cash is always hard to document - but it is not impossible - Plan on a solid letter explaining what it is if they need more they will let you know

Good Luck you should be fine - I dont see anything that would recent you from getting a loan now or later

Brian

[wantingmore1]

Thanks for the prompt reply and insight, Brian. I really appreciate it! I will be looking for loan officers/ buyers agent soon then, if everything looks okay.

I did not realize there would be others on here close to where I live =)

[BrianB_The_Loan_Professor]

You are welcome

I think you will be fine when you are ready to apply - based on what you shared you should be able to get a preapproval 

Small world - I am down on the delta now (kind of in the Bay Area) but travel up that way often - I will be in Marysville tomorrow working on one of our rental properties

Let me know if there is anything else I can help with

Take Care