First Time Home Buyer Loan Advice

[Anonymous]

Hello everyone, I am new on all this, on March my wife and me we went to our local CU to see mortgages since the rates are very low, we were told about how they go with the credit of the one that is lower, my wife had 750 and sadly mine was 608 at that time, I do not know which score they used if it was the middle or not, as today I have improved it, my Fico 8's middle score is 711, and my mortage middle score is 673, we have an yearly income of $61K before taxes, we are looking to get a max of $200K loan with 3.5% on down payment, do you guys think that with my 673 score it is factible? Thanks!

[sxa001]

With 3.5% down are you looking at FHA loans or trying for one of the 97% LTV conventional loans that some banks advertise?  Minimum scores there can vary, for FHA you likely will have no issue qualifying but of course with FHA you have Mortgage Insurance for the life of the loan.  FHA loans are the choice of many first time home buyers but can often be more expensive in the long term unless you can refinance later for a conventional loan. 

How fast are you looking to purchase a home? What does your profile look like?  Average Age of Accounts? Any negatives? DTI ratio/utilization? 

You have done great getting your scores up since March, depending on what is keeping the scores down now it may not be hard to get you above 680 which will help.  If you could get above 720 that opens even more doors.  

I was tempted a few years ago to do an FHA loan when my MMS was below 700 and I didn't have enough saved for 5% down, I do not regret spending 3 more years renting and working to get my scores higher, in the end knowing how much you can save by making a sacrifice for a few years will make you feel so much better.  In the end you should do what is right for you and your family but if I were you I would try to get 720 or higher and save a little more for 5% down conventional and you will see you will save a lot. PMI drops the higher your scores are and in 5-7 years of paying it you could save thousands. 

Good luck in your home buying adventure! 

[Anonymous]

We wanted to purchase between 1-3 months, average age is 2 years and 2 months, no negatives, collections or late payments, my utilization rate is 27% total, we were advices to do it since we can refinance in the future when we have more length on the history because is too low, but everything is in good shape overall, 

[sxa001]

Is that revolving utilization?  I will let others chime in on how much the thin file impacts the mortgage score but if you could get the utilization below 10% that would likely get you the points to get you above 680 for sure if not higher and that will help. 

Good luck with your home journey!