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Hello all, I decided to try and buy an affordable home. My score are all in the 630 range. I make 32k a year. I have $0 in credit cards. I owe 8k on my car and have about 40k in student loans. I have around 4k for a down payment. I don't have any negatives on my report. I am looking to buy a house for 40k. My LO said I shouldn't have any issues, but apparently the UR can be difficult.
Based on your experience what do you think?
Thank You!
Things may be different where you live, but most lenders here will not do a 30 year mortgage on a home that is $40,000. Let's say that after down payment you put $38,000 on a loan, the P&I on that at at 5% is a whopping $204. I just don't see a lender jumping at that. A 5 year amortization is doable though.
Your middle score typically needs to be atleast 620, so you are close.
Do you have credit cards, they just have no balances on them, or do you not have credit cards at all?
It really seems that you must have some negatives on your report to be at 630. Where did you get those scores?
Also, what are the monthly payments on the car and the student loans? Usually, 40k in student loans is about 400/mo in standard repayment, which is 15% of your salary. P&I (not property taxes) with 4k down on a 40k house would result in payments around $235/mo at 5% interest, which is 8.8% of your income...that's before you add in the PMI and the property taxes...
The numbers seem to work out overall, but is that 4k strictly for DP, or do you expect to be using 4k to cover down payment and closing costs? I found that the most expensive part of closing costs is the pre-paid property tax portion.