Will we qualify??

[Anonymous]

I have been lurking around for awhile and I guess it's my turn to ask a question!   My fiance and I are looking at a condo that is listed for $155,900 and are hoping we can put an offer down on it.  Do you think we will qualify for an FHA loan?  My credit scores are 667, 638, and 654 and my fiance's are 694, 689 and 678.  I have a couple collections that are all 6 years old and paid in full and my fiance has no collections.  My dti is about 33% right now and his is at 45%, this includes student loans that are deferred until 2011 on both of our reports.

Do you think we can try for an FHA loan or should we just try for a conventional loan?  The interest rates keep jumping up so we are trying to tie something down as soon as we can.

[Anonymous]

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GonnaBeDebtFree wrote:

I have been lurking around for awhile and I guess it's my turn to ask a question!   My fiance and I are looking at a condo that is listed for $155,900 and are hoping we can put an offer down on it.  Do you think we will qualify for an FHA loan?  My credit scores are 667, 638, and 654 and my fiance's are 694, 689 and 678.  I have a couple collections that are all 6 years old and paid in full and my fiance has no collections.  My dti is about 33% right now and his is at 45%, this includes student loans that are deferred until 2011 on both of our reports.

Do you think we can try for an FHA loan or should we just try for a conventional loan?  The interest rates keep jumping up so we are trying to tie something down as soon as we can.

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I would say you should be good as long as atleast one of you has the income to support the monthly payment.  Just to be safe you might want to try and get his dti a little lower.  Shane or Dallas would be able to better steer you with some more info

[Anonymous]

My income is $45,000 a year and I've been in my industry for 8 years and at this company a little over 2 years and his is $75,000 a year when he works full time.  He is an electrician with the union and has been in the union going on 9 years, last year he was out of work for 8 months but this year has been steady so far!

[DallasLoanGuy]

how did you calculate that dti? and are you including a proposed housing payment on the condo in that calculation?

You look like a good candidate. But that job gap may need some explaining.

[ShanetheMortgageMan]

Here's what it one particular lenders guidelines say about using income from someone who is employed in a union:

If a union member such as a plumber, electrician, merchant marine, or sheet metal worker is continuously employed by one employer, normal methods of calculating hourly or salary income will be used. Standard alternative documentation or VOE's will suffice.

Union members, who at the direction of their union local, may work for a number of employers will have the union local verify how long the applicant has been a member and their current rate of pay.

To determine income, obtain 2 years tax returns and/or W-2s from all employers and year to date income. Develop an average number of hours worked and apply the present hourly rate of pay to determine qualifying income. The tax returns and W-2'S must support the income developed. Applicants may also receive unemployment compensation which is typically shown on the tax returns and which can be included in the average of income.

So for your husbands situation, if he is employed by one employer, would have the normal way of calculating income (average hours worked per week multiplied by hourly rate).  If he works for a number of employers then the average hours per week worked over all employers, multiplied by his present hourly rate of pay, would be the calculation to use.

When buying a condo with FHA financing, one preliminary step you should take is determining if it's already an FHA approved condo or not.  HUD's link to search for FHA approved condos is https://entp.hud.gov/idapp/html/condlook.cfm.  If it is not an FHA approved condo I'd suggest you contact the property management company or homeowners association to see if they have filed for HUD approval.  If they haven't, the condo can still be acceptable if it can get an "FHA Spot Approval".  The spot approval is a bit involved and could cost a little bit of money as deeds on all units in the condo association need to be pulled to make sure the concentration of FHA loans is not higher than acceptable levels... usually title companies will charge something around $10 per deed, so if it's a 200 unit complex, that's $2k in fees just to pull deeds.

Oops hit submit too soon...

If it's not an FHA approved condo then it still might be an acceptable condo for Fannie Mae & Freddie Mac, you can look up that list at https://www.efanniemae.com/sf/refmaterials/approvedprojects/.  If it's not on that list you might not need to worry, because if the condominium complex is deemed "Warrantable" then it's still OK for Fannie & Freddie's programs.

Message Edited by ShanetheMortgageMan on 07-23-2008 11:27 AM

[Anonymous]

I used the dti given to me when I pulled all 3 scores and credit reports on MyFico.com.  My TU dti is 25% and my EQ is 33%, my fiance's are both 45%.

In regards to him working in the union, he works with multiple companies in a given time until a job is finished and they usually lay him off.  The company he is with now however wants to retain him and I think promote him to a Foreman eventually.

Unfortunately the condo is not listed on the link you gave me and there are a lot of units, not really worth it to invest that money into becoming FHA approved.  I would just use that money to use as a down payment with a conventional loan instead.

[ShanetheMortgageMan]

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GonnaBeDebtFree wrote:

I used the dti given to me when I pulled all 3 scores and credit reports on MyFico.com.  My TU dti is 25% and my EQ is 33%, my fiance's are both 45%.  Debt to income ratio is calculated by taking your total payments on consumer debt (credit cards, car loan, student loan, etc.) + the new proposed housing payment, and dividing that figure by the total amount of income to qualify with.  So for example if your car payment is $300 & your credit cards are $200, and the new housing payment is $1,500... that totals $2k, and if your income is $5k/mo, then your debt to income ratio would be $2k / $5k = 40%.

In regards to him working in the union, he works with multiple companies in a given time until a job is finished and they usually lay him off.  The company he is with now however wants to retain him and I think promote him to a Foreman eventually.  Did he file for unemployment during that 8 month gap?

Unfortunately the condo is not listed on the link you gave me and there are a lot of units, not really worth it to invest that money into becoming FHA approved.  I would just use that money to use as a down payment with a conventional loan instead.  Sometimes it's hard to determine if the condo is approved or not by looking at that list because often the condo "names" are just some numbers, you usually need some sort of inside information from the property management/homeowners association to associate it to the list.  But if you punched in the zip code and only 2 condos came up, named "Condos R Us" and "Lakeview Condos" and the condo you are looking at is called "La Boca Chica" or whatever, then odds are that it's not approved.

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[Anonymous]

Okay both of our dti would be under 40% then, and that is including a mortgage of $1,200.  He did use unemployement all 8 months he was out of work, his take home after taxes was $450/week from EDD.

Should we begin the prequalifying process this week so when we tour the condo if we want to put an offer in?  If the answer is yes should we prequalify or just be preapproved?

[ShanetheMortgageMan]

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GonnaBeDebtFree wrote:

Okay both of our dti would be under 40% then, and that is including a mortgage of $1,200.  He did use unemployement all 8 months he was out of work, his take home after taxes was $450/week from EDD.

Should we begin the prequalifying process this week so when we tour the condo if we want to put an offer in?  If the answer is yes should we prequalify or just be preapproved?

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Sounds like your DTI would be good then.  Filing for unemployment is definitely helpful, and if there was a good reason he wasn't working for 8 months (such as a downturn for the demand of that industry... rather than him sitting on the couch watching Maury) then you should be OK.   I recommend you get pre-approved beforehand, especially with the employment situation, you don't want to find the home of your dreams and find out financing isn't good to go.  Any particular reason you are looking at a condo rather than a house?

[Anonymous]

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ShanetheMortgageMan wrote:

Sounds like your DTI would be good then.  Filing for unemployment is definitely helpful, and if there was a good reason he wasn't working for 8 months (such as a downturn for the demand of that industry... rather than him sitting on the couch watching Maury) then you should be OK.   I recommend you get pre-approved beforehand, especially with the employment situation, you don't want to find the home of your dreams and find out financing isn't good to go.  Any particular reason you are looking at a condo rather than a house?

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We started looking at houses but right now the market in San Diego is still fairly high for homes.  We prequalified through BofA about 1.5 years ago for $450k but we didn't want a mortgage payment of $3,000/mo.  It is just the two of us and two dogs right now and the condo is pretty big with a 2 car garage and 3 bedrooms which will more than suit are needs for now.  The hope is to keep this property for 7-10 years and sell in order to buy a house closer to San Diego.

Another major reason the condo peaked our interest was for the fact that construction is slowing down and with lay offs all over the place in his industry I know I can afford the mortgage with my income and his unemployment if need be.  I'd rather live in a condo and keep putting money in savings in each month than live paycheck to paycheck but live in a house!