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I want to get FHA, where to start?

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Frequent Contributor

I want to get FHA, where to start?

Hello all, 
I am currently considering purchasing a home through the first time home owner program.
A little about me. I am a single mother with three little ones. I have been with my job for 2 years. My income 2017 year was $16000 but upon getting a raise and transferring i now avg'd 32,000 for the year 2018. I make $3900 before taxes. I have credit cards:
Discover $750 of $750
Fingerhut $422 of $800
Bank of America $400 of $400
Tdecu $300 of $300
VS $160of $350
Amazon $563 of $600
reporting balances but all other credit cards are at $0. ( I can pay these down within the next few months not sure which method to use)??
Loans reporting:
DCU car loan $6300 with $275/month payments. 
Sun Loan $500
DCU personal loan $250
Student Loan $2500 on defferment while im still attending school(plan on getting the other half of it this semester, will that look bad when direct deposited into my account)?
 
Collections:
 
World Finance -charge off but paid and now showing $0 set to drop off in July which i will see if i can get it off sooner
Common Wealth Finance $1863 -hospital
Paramount Recovery $556 -hospital
Alexander Rose - $2651- broken lease
 
My scores are EQ fico- 621
TU fico- 634
EX: 630
Other then the questions above i'd like to know:
1. What will be included in my DTI and how do i balance it out to goal DTI
2. Will the deffered school loans affect anything? 
3. I have $4000 sitting in my savings which has been there only a few days.Do i need more of a downpayment possibly if so how much?
4. Will i need to pay off the broken lease and hosp. bills prior to getting the ball rolling ?
5. When would be an ideal time to start trying to get one, my lease is up in May.
6. What do i need to provide to the bank to start the process?
 
I dont want to start the process if i am not ready but i do need an idea of what i need to do next. Any help would be much appreciated. Sorry for the lengthy post.
 
 
 
Message 1 of 13
12 REPLIES 12
Established Contributor

Re: I want to get FHA, where to start?

The broken lease might really hurt the most--especially if ANY payment amount reports w/in the monthly payment column of your credit report or if it is ever sold or becomes a judgment.

 

If it's a valid claim then it could continue to haunt you if you don't address it and pay/settle somehow.

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 2 of 13
Frequent Contributor

Re: I want to get FHA, where to start?

I can pay it with no problem. I planned on it before applying.
Message 3 of 13
Valued Contributor

Re: I want to get FHA, where to start?

The broken lease and maxed out CC should be taken care of ASAP, then your score should increase some. Which will help with CLIs on current CC, and may be needed to show experience with higher limits. Something the Bank will consider when loaning large amounts, and whether you have demenstrated the ablity to repay such an amount.

Based on your current situation though, I feel you're a good year(or more) away from securing favorable financing to purchase a home.

 

To determine your DTI, take your total debt and divide it by your income. Banks typically like to see it under 43%.

Any bill that reports will factor in. 

Message 4 of 13
Frequent Contributor

Re: I want to get FHA, where to start?

I just payed on those cards from above the new totals are:

Discover $0 of $750

Fingerhut $0 of $800

Bofa $0 of $400 

TDECU CLASSIC MASTRCAD $0 of $300

VS $162 of $570

Amazon $427 of $600

SUN LOAN $0 PIF

DCU $162 OF 250.00 INSTALLMENT

 

 

I do plan on paying off the lease beg of next month. I do have 3 open installments. 

I have 13 cards in total the highest CL i have is $1500 Care Credit. I don't want to take any hard pulls for asking for additional increases at this point. In total i beleve i have about $8000 CL if all my cards are added together. I did just get an increase on my Disco card when it graduated it was automatic, should i request another? Oh and im paying off the Sun Loan balance as soon as i get off today.

Message 5 of 13
New Visitor

Re: I want to get FHA, where to start?

Depending on the state you're in, here's some info on determining if the DTI is a fit: https://www.fha.com/fha_requirements_debt

 

Some of the qualification and programs have state specifics, so for Arizona: http://fhamortgagearizona.com

 

If you're looking to determine the limit of what you can borrow, here's a county lookup tool: https://entp.hud.gov/idapp/html/hicostlook.cfm'

 

That all said, as rates are on their way up, it'd advisable to get a rate locked in with a pre-approval sooner rather than later. That doesn't mean you've commited, and you can always rate shop - but it'll at least help if rates do go up while you're in the process of buying.

Message 6 of 13
Frequent Contributor

Re: I want to get FHA, where to start?

THANKS!

Message 7 of 13
Established Contributor

Re: I want to get FHA, where to start?


@Newbie2018 wrote:
Hello all, 
I am currently considering purchasing a home through the first time home owner program.
A little about me. I am a single mother with three little ones. I have been with my job for 2 years. My income 2017 year was $16000 but upon getting a raise and transferring i now avg'd 32,000 for the year 2018. I make $3900 before taxes. I have credit cards:
Discover $750 of $750
Fingerhut $422 of $800
Bank of America $400 of $400
Tdecu $300 of $300
VS $160of $350
Amazon $563 of $600
reporting balances but all other credit cards are at $0. ( I can pay these down within the next few months not sure which method to use)??
Loans reporting:
DCU car loan $6300 with $275/month payments. 
Sun Loan $500
DCU personal loan $250
Student Loan $2500 on defferment while im still attending school(plan on getting the other half of it this semester, will that look bad when direct deposited into my account)?
 
Collections:
 
World Finance -charge off but paid and now showing $0 set to drop off in July which i will see if i can get it off sooner
Common Wealth Finance $1863 -hospital
Paramount Recovery $556 -hospital
Alexander Rose - $2651- broken lease
 
My scores are EQ fico- 621
TU fico- 634
EX: 630
Other then the questions above i'd like to know:
1. What will be included in my DTI and how do i balance it out to goal DTI
2. Will the deffered school loans affect anything? 
3. I have $4000 sitting in my savings which has been there only a few days.Do i need more of a downpayment possibly if so how much?
4. Will i need to pay off the broken lease and hosp. bills prior to getting the ball rolling ?
5. When would be an ideal time to start trying to get one, my lease is up in May.
6. What do i need to provide to the bank to start the process?
 
I dont want to start the process if i am not ready but i do need an idea of what i need to do next. Any help would be much appreciated. Sorry for the lengthy post.
 
 
 

With FHA general rule is 3.5% down of purchase price, then closing costs ( PMI, taxes, appraisal, insurance, etc). 

With the little ones- do you received any child support?

Are the scores you wrote your FICO 8 scores, or are they the "mortgage" scores provided here? Lenders will use the "middle" score, of the 3 bureaus, toss out the highest and lowest score. 

In preparing for a mortgage, the number of cards reporting a balance have an affect on those scores. Best to just let one card when the time is right to report a balance, a bank card at that, not a retail card. Of that, reporting only <8.9% of that ONE card's total credit limit is optimal for scoring, which affects your rates. 

Derogs will suppress your scores horribly. How soon will the other two collections will age off?  If you haven't paid on the past rental one, and it does need to be paid, if anyway possible to get a pay for delete will help. If it hasn't been reporting montly, and suddenly reports zero balance in Feb, it can possibly decrease your score. 

Do not apply for any new credit. 

 

Yes, you will have to document everything in deposits, and anything cash. Keep a paper trail here on out, as I needed to write reason why I deposited $60 cash mo. that my daughter gives me towards our family cell phone plan. 

 

IMHO, I'd save more towards down payment and closing costs with your new income plus extra expenses, the inspection cost is on you, and if the inspection fails, you are out money. Factor in moving expenses, utilities. Work on the derogs to the best of your ability preferably for a pay for delete. 

Message 8 of 13
Frequent Contributor

Re: I want to get FHA, where to start?

Thanks for taking time to answer thoroughly. I am planning on paying the full balance within the next month. Hoping a PFD comes out of it. Fingers crossed! The other derogs are hospital bills which from what i was told dont affect once gone into underwriting? I do get child support but not much, roughly $350/ month. I just heard of the program NACA so i may go that route instead. Im new to all of this. I now realize there are several loan programs for and categories for mortages. I was also going to look into Down Payment assistance programs. My lease is up in May and from the looks of it i have alot of work to do. Maybe next year (sigh).

 

(where do i find my mortage scores)

Message 9 of 13
Frequent Contributor

Re: I want to get FHA, where to start?

I purchased the EX & TU. I get my EQ from dcu.

EQ 596
TU 617
EX 629
Message 10 of 13