topic Re: Which loan can I get? comment advice, Thx in Mortgage Loans

Which loan can I get? comment advice, Thx

Anonymous — Tue, 06 Aug 2019 02:24:21 GMT

Hi MyFICO family,

I have been working hard in re-building my Credit. I have payed a lot of money paying off debts so I don't have too much money on hand right now just around $24K, (for downpayment and CC).

My wife and I are planning to buy a house as our First-time home buyers.

House price targeted: $400,000

here is my current picture:

Current Mortgage Scores: 734, 746, 757 (July 2019)

Income: 110K per year

Monthly Expenses:

Car Payment: $409

student loan: $120

Alimony/child support: $ 1,700

total combined student loan balance: $5,000

Total car loan balance: $15,000 approx.

I know my CS & Alimony is too high but it is what it is now...

just to mention that I'm using the AZERO method in which I'm using just one credit card with a UT% less than 10% each month.

Any chance I will be able to get a conventional Loan? any advice, Will a FHA loan be a good option for us?

Thanks,

Re: Which loan can I get? comment advice, Thx

Anonymous — Tue, 06 Aug 2019 11:38:51 GMT

You can get a conventional. Wait a few months, reduce your utilization, and save a bit more for a 5% down payment and closing costs. Also, look to get seller concessions to help cover some of the costs.

Re: Which loan can I get? comment advice, Thx

CreditInspired — Tue, 06 Aug 2019 18:15:37 GMT

@Anonymous wrote:
Hi MyFICO family,

I have been working hard in re-building my Credit. I have payed a lot of money paying off debts so I don't have too much money on hand right now just around $24K, (for downpayment and CC).

My wife and I are planning to buy a house as our First-time home buyers.

House price targeted: $400,000
here is my current picture:

Current Mortgage Scores: 734, 746, 757 (July 2019)

Income: 110K per year

Monthly Expenses:
Car Payment: $409
student loan: $120
Alimony/child support: $ 1,700

total combined student loan balance: $5,000

Total car loan balance: $15,000 approx.

I know my CS & Alimony is too high but it is what it is now...

just to mention that I'm using the AZERO method in which I'm using just one credit card with a UT% less than 10% each month.

Any chance I will be able to get a conventional Loan? any advice, Will a FHA loan be a good option for us?

Thanks,

Hi OP,

That $1.7K alimony/child support hurts. I think a $400K home may be out of reach even with $20K down. I am providing a link to a calculator, which of course isn't 100% accurate (and it probably is using a very conservate backend/front-end ratio), but I think it will give you an idea and you can play with the numbers. I used $2.5K for property taxes and $1K for home owner's insurance (guesstimates). I also used $100 for CC debt. I put in 30-yr fixed., 3.8% interest.

https://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx

It probably is a good idea to visit a LO for a prequal (no HP needed) to get a true idea of what price home you can afford. Does your wife have an income and will she be on the mortgage? If yes, this will help a lot. What is her middle score?

GL2U

Re: Which loan can I get? comment advice, Thx

Anonymous — Tue, 06 Aug 2019 18:40:53 GMT

You are in a good position for a mortgage, just not a 400k mortgage. Stated income and debt would put you in the 250 to 300k range.

Re: Which loan can I get? comment advice, Thx

Anonymous — Tue, 06 Aug 2019 20:35:56 GMT

Thank you all for your comments...

If I pay off both the car loan and Studdnt loans, will my situation change to reach the target house?

I'm living in CA and these are the price range in a descent and nice area around $400k

Thanks again for your comments

Re: Which loan can I get? comment advice, Thx

Mortgage-Specialist — Tue, 06 Aug 2019 20:46:23 GMT

I just looked over your info and can see that you would not qualify for conventional due to debt ratio, however you do in fact qualify for FHA. The question is, what county are you looking to live in ? Would need to see what the max allowable FHA loan limit is in that county.

Re: Which loan can I get? comment advice, Thx

MauiMan85297 — Wed, 07 Aug 2019 19:16:47 GMT

If your anywhere in So Cali or far northen Cali then you would be fine in FHA as those limits are far above 400k, what county?

Re: Which loan can I get? comment advice, Thx

Anonymous — Wed, 07 Aug 2019 23:07:29 GMT

The FHA limit in the county we want is over 400k , so we are ok with that...

Just would like to know if I pay off both my car loan and student loan, my DTI would be approx. 47%... so would we be able to get a conv. Loan with 47% DTI?

Re: Which loan can I get? comment advice, Thx

MauiMan85297 — Wed, 07 Aug 2019 23:19:38 GMT

Conv is 45 backend DTI

Re: Which loan can I get? comment advice, Thx

CreditInspired — Wed, 07 Aug 2019 23:29:43 GMT

And don’t forget 5% down + closing costs, which of course, ask for seller’s closing costs assistance up to 6% of sales price. If it’s a seller’s market, like it is here in VA, that’s not going to fly.

Re: Which loan can I get? comment advice, Thx

MauiMan85297 — Wed, 07 Aug 2019 23:36:23 GMT

It would be tight if you paid off the car and student loan.

$385,000 loan amount (gives you about $405k purchase price) x 3.875% Conv loan

P&I: $1,810

Taxes: $3600 (est in Cali)- $300

HOI: $100

PMI: $160 (based on .5% of loan but could be higher)

$2370 FE/$9166= 26%

$4070 BE/$9166= 44%

Re: Which loan can I get? comment advice, Thx

Anonymous — Thu, 08 Aug 2019 16:24:21 GMT

Thank you all....

Just curiosity, how many payment left should I have in an installment loan so this debt is not included in the DTI calculation?

Re: Which loan can I get? comment advice, Thx

Anonymous — Thu, 08 Aug 2019 17:08:08 GMT

All active debts will be included - everything with a payment.

So the answer is 0. It should be paid off.

Re: Which loan can I get? comment advice, Thx

Anonymous — Thu, 08 Aug 2019 17:14:33 GMT

I heard if you have 12, or 10 payments left, this debt doesn't count on the DTI calculations?

If I pay off these debts, my score would drop since these accounts would be closed now...
I read it somewhere but don't remember where...

Thx

Re: Which loan can I get? comment advice, Thx

Mortgage-Specialist — Thu, 08 Aug 2019 17:36:12 GMT

When it comes to FHA loans, if an installment loan has 10 payments remaining or less, the debt can be omitted from your debt ration ONLY if that installment payment is less than 5% of your monthly income...

When it comes to Conventional, you can omit that debt as well and there is no restriction like there is for FHA. Keep in mind, the average lender is strict and may not abide by this. Some lenders will do this on a case by case basis.

Also, Conventional allows 50% debt ratio... As yuo see here in this thread alone how other lenders have overlays and may cap it at 45%

Re: Which loan can I get? comment advice, Thx

MauiMan85297 — Thu, 08 Aug 2019 19:49:15 GMT

@Mortgage-Specialist wrote:
When it comes to FHA loans, if an installment loan has 10 payments remaining or less, the debt can be omitted from your debt ration ONLY if that installment payment is less than 5% of your monthly income...

When it comes to Conventional, you can omit that debt as well and there is no restriction like there is for FHA. Keep in mind, the average lender is strict and may not abide by this. Some lenders will do this on a case by case basis.

Also, Conventional allows 50% debt ratio... As yuo see here in this thread alone how other lenders have overlays and may cap it at 45%

Conventional loans have a max DTI of 45% (not an overlay by certain companies) as posted above. Directly from FNMA guidelines..

*Up to 50% DTI allowed with certain
compensating factors (not everyone will have compensating factors)

Re: Which loan can I get? comment advice, Thx

AZEsq — Mon, 19 Aug 2019 15:50:22 GMT

@MauiMan85297 wrote:
@Mortgage-Specialist wrote:
When it comes to FHA loans, if an installment loan has 10 payments remaining or less, the debt can be omitted from your debt ration ONLY if that installment payment is less than 5% of your monthly income...

When it comes to Conventional, you can omit that debt as well and there is no restriction like there is for FHA. Keep in mind, the average lender is strict and may not abide by this. Some lenders will do this on a case by case basis.

Also, Conventional allows 50% debt ratio... As yuo see here in this thread alone how other lenders have overlays and may cap it at 45%
Conventional loans have a max DTI of 45% (not an overlay by certain companies) as posted above. Directly from FNMA guidelines..

*Up to 50% DTI allowed with certain
compensating factors (not everyone will have compensating factors)

THIS. With his scores, he'd be unlikely to be eligible for a portfolio loan product. These often have those types of allowances...

Re: Which loan can I get? comment advice, Thx

VALoanMaster — Mon, 19 Aug 2019 16:09:55 GMT

Based on the info you've provided, a conventional loan with a 47% DTI should be doable as long as you get an approval through an automated underwriting system.