First time homebuyer with borderline case for application denial ? ... help appreciated!

[Sk323i]

I live in California. I am interested in purchasing my first home in Arizona. 

Monthly Gross Income in CA: $3975.00 -- I work as a consulting analyst in IT full time and have been with the same firm for almost 3 years now. Prior to that i was an independent contractor for 3 years. Prior to that I was employed as a technician for 3 years. 

Experian FICO 8: 639

TransUnion FICO 8: 636

Equifax FICO 8: 627

Mortgage FICO Score 2: 617(Experian) - 673(TransUnion)

Target Home: $198,000 -- new construction.

Down payment = 4% = $9000 (This is mostly a gift from parents and 1 month salary of mine).

Interest rate: Assuming 5% but i have no idea?

Term: I guess 30 years is the norm right?

Monthly payment = $1213.00

My DTI: 43%

Credit Util overall: 77% - goal is to have it down to under 10% by March, factored into #1 Recurring Monthly Debt Model

Credit Limit is $9500

Credit Balance is $7550

#1 Recurring Monthly Debt model - including cost of new house payment: $1924.00

#2 Recurring Monthly Debt with minimum payments towards Credit Util- exclduing cost of new house payment: $357.08

Total Fixed Payment to Effective Income: 30%

Total Amount of new house payment: ~$1200

Would this get approved? By Whom? As an FHA loan?

I'm just moved back at home with my parents right now -- so I will have ability to save on rent for next 30-60-90 days max in preparation to put an offer and close on a house like in the deal I mentioned above, but I want to move on the property fast because I am concerned that 1 it will get purchased and 2 that interest rates will go up in December. 

I wonder how much of a loan I could get approved for if I waited until January? And my finances were in a little better shape. 

I am single and I have no immediate expenses other than a phone bill and car insurance which together is $357ish.

Also, can someone explain to me when exactly the "down payment" or any cash for that matter is due in a transaction?

Should I have cash available at any moment to close?

Is it OK to put in offers, and then have the down payment ready on the day you close?

Is there something like downpayment assistance from a small lender with FHA loans?

What should I look out for?

Thank you for any help anyone can provide!!!

[Anonymous]

You when get a nice bump in your scores if you got that that cc utilization below 10%.Is that house payment including home owners ins.,property tax and mortgage insurance?I didn't try to figure out the payment but it seems awful low considering your figuring your interest rate at 5% which by the way is probably way too high,I wouldn't think it would be above 4.25% and possibly lower depending on any lender concessions or down payment assistance you might utilize.As far as down payment assistance you need to find out what programs if any are available for your state and county.Good luck with everything.As long as your monthly payment is accurate I would say you have a chance but I'm no expert and you Definately need to get that utilization down.

[Sk323i]

Yes, that house payment includes mortgage, insurance, property taxes, etc. 

Anywhere you would receommend that I look for a down payment assistance or loan program that could help me with down payment?

Also, when do I need to have cash on hand ready to deliver a check? Is it 50% at offer, 50% at close?

[kats_rebuild]

So I'm no expert, I'm closing on my first house in about 3 weeks, with an FHA loan. My purchase price was 304,000 and I put 10k down as earnest money. The rest of my downpayment and closing costs will be paid at closing. I went under contract on September 1, and I close October 12. 

I know that the earnest money I put down is much higher than other people's experiences. I live in a competitive market and apparently 10k is standard for a good offer.

[Sk323i]

What market are you in?

At what point did you deliver that Earnest money and to whom?

Is that amount more than 50% of what your total downpayment cost would be ?

[kats_rebuild]

I live in Washington DC. I paid the 10k earnest money via check to an escrow account on the day I signed the contract. They deposited it about 4 days later. My total downpayment is about 15k and then another 8k or so estimated for closing costs. So total is about 23,000 cash required to close. So the rest of the money will be paid via a wire transer to the title company on my closing date (October 12). 

So I paid 10k on September 1, and will pay 13k on October 12. Together that covers the closing costs and the downpayment.

[StartingOver10]

Earnest money is market driven and driven by the buyer and seller involved in the specific offer.

I am a Realtor and it really depends on the market at the time you are buying and how many people may be bidding on the home (how desirable) or if you are trying to get a significant price reduction on the home with a large EMD as part of your offer.

I had a sale last month where the home was only $450k but the EMD was ~$100k on a cash purchase. This was to induce the seller to accept less (along with other terms). 

Naturally, a $10k to $25k  EMD deposit is much more common at that price point (except cash offers in our area are usually a minimum of 10% of purchase price). 

A small deposit generally indicates a weaker offer - 

EDIT:  The EMD is usually held by one of the following:

1. The real estate brokerage for the buyer in an escrow account OR 
2. The title company or closing attorney's escrow account.

The deposit is due per the terms of the offer. In my area of S, Fl it is common to not pay the deposit until 1 to 3 days after the seller accepts the offer in writing. That particular delay in paying the deposit is also notated on the offer, in writing. Some people pay it before the offer is made. REO's are different. Builders contracts are also different. 

[Sk323i]

If the home is a new home is Earnest Money still necessary?

The home I am interested in is still being built. It's in a suburb outside of Phoenix - I dont think its very competitive. 

Thank you,

Steven

[StartingOver10]

Yes, EM deposits are still required for new construction. Remember the EMD is part or all of your down payment. If you end up getting 100% financing you still have to put down a deposit. The amount you put down will then apply toward your closing costs and what isn't used is refunded to you. 

At all times EMDs are negotiable. 

Builders contracts are a little different. The sales rep for the builder will typically discuss a schedule of deposits. Make sure to ask about what they require for extras too.

In my market, the builder requires a substantial part of the extras to be paid (50% is typical) at the time you order the extra. If you have an agent representing you, your agent can get in touch with the builders rep and get details for you. 

[Sk323i]

OK -- so the term" Earnest Money" is only applicable to older home re-sales.

New homes are done using the term "schedule of deposits".

If the builder has listed a home at a certain price, and has a plan for a base model -- how much input do I have on the exact materials being used?

When do I move to "contract"?

Right now i'm going to go to a lender, get a pre-approval, go to view the desired property with a sales agent, and then shop around for other lenders - while the house if being built. 

At what point do I put in my official offer, or what is a "contract" before an offer?