topic Re: Qualifying for Conventional with lower score? in Mortgage Loans

Qualifying for Conventional with lower score?

jsecook — Tue, 20 Oct 2020 16:11:05 GMT

Hi All,

I recently finished paying off collections and charge offs on my credit report. My spouses finances and scores are mid 700's and not a problem. (we've been married two years in November but I was not financially responsible). Its mainly mine. Our current home is in just his name in which we should have about 60-70k in equity. Its an FHA loan with PMI. We are looking at possibly purchasing a new home and are thinking we'd be comfortable in the 500-550K range with a payment under 3K a month. My income has shot up since we met from 50K a year to current 90K per year and he averages around 115K per year. I am in a repayment plan with the IRS that I've had electronically withdrawn for over a year now. I am factoring that into my DTI.

Our DTI ratio with 5% down would be right at 36%. Is it possible to do a conventional loan with 5% down with my middle mortgage score being roughly 642 Several of the collections that we paid have not update nor deleted yet and with how crazy the scoring system is, I'm wondering if my score will go up or down? We recently settled a REPO i had from before we met that is a 0 balance now. As well as 4-5 collections. All but one agreed to delete for payment. I'm also still fighting with a medical collection of 1500 dollars that I do not owe but getting the company to respond has been a nightmare. I know my reports wont be 100% clean.

As well, can you count 401K as reserves for a mortgage?

Re: Qualifying for Conventional with lower score?

NC_Mtg_Loaner — Tue, 20 Oct 2020 16:15:20 GMT

yes you can.

However, MI with a score < 680 will be costly so be sure to wait/maximize your credit score before it's pulled for qualifying or prior to locking but you might also want to consider "hustling" to get to the 80% LTV so you can get that MI removed (would be a goal of mine if I were in your shoes)

Re: Qualifying for Conventional with lower score?

jsecook — Thu, 22 Oct 2020 12:22:15 GMT

We did get our preapproval yesterday. 3.29% conventional 30 year fixed. Since there are several things in the process of updating and or deleting we will have them redo credit scores middle of november.

He's sending over the numbers this morning for us to review.

Re: Qualifying for Conventional with lower score?

Harmony12 — Fri, 23 Oct 2020 15:37:06 GMT

@jsecook

Are you paying any points to get that rate? Which lender are you using?

Re: Qualifying for Conventional with lower score?

jsecook — Fri, 23 Oct 2020 15:43:01 GMT

We are paying about 3K to buy down the rate from 3.65%. We are going through Foundation Mortgage in TN! We can put more down but we want to renovate the kitchen and replace the carpet.