Mortgage Application with recent Inquiries

[CreditNoob]

I am planning to secure a $525K mortgage, preferably FHA, around June or July 2025. However, I am concerned about my recent hard pulls (HPs), past late payments, and overall financial profile.

Credit Inquiries

• In January 2025, I applied for an Amex card, which resulted in two hard pulls (TransUnion & Experian).
• Yesterday, I applied for a Chase card, which resulted in one hard pull (Experian).
• Total hard pulls: 3
• Reason for the application were the SUBs that I could not ignore.

Credit History

• I have some late payments, but the most recent one is over a year old.
• I also have collections and charge-offs, but all have been paid in full.

Income

• My salary: $140K annually (+$30K bonus).
• My wife’s salary: $34K annually (no bonus).
• Social Security benefits (SSA): $13K annually.

Debt & Utilization

• My debt:
  • Student loans: $95K+ (deferred)
  • Credit cards: $0 balance except for one card at 2% utilization
• My wife’s debt:
  • Credit card balances: $5K (9% utilization due to high limits)
  • Car loan balance: $7K+
  • Student loans: $45K (deferred)

Main Concern

Given my three hard pulls, past late payments (most recent over a year ago), paid collections and charge-offs, deferred student loans, and my wife's debt, should I be concerned about mortgage approval for an FHA loan?

[ShanetheMortgageMan]

Three inquiries in a short period aren't a dealbreaker for FHA loans, as they focus more on recent late payments, credit scores and credit history.  Credit scores of 648, 635, 667 are usually fine to qualify for an FHA loan and would make you eligible for a 3.5% down payment.  Lenders usually want to see 12 months of clean credit, so since yours are all beyond that period of time they shouldn't have much of an impact.  Same goes with the collections and charge-offs, if they occurred over 12 months ago then shouldn't be a big deal.

The amount of debt isn't as important as the monthly payments on the debt.  How much is the car payment?

Deferred student loans or student loans in forbearance qualify with a payment equal to .5% of the balance, so that adds $475 + $225 as payments to your and your wife's student loans.

The bonus income can be used to qualify if you've received it for at least 1 year, but since your credit history isn't excellent it's possible lenders would want you to receive it for at least 2 years before it can qualify.

Even if none of the bonus income is used, the car payment is $500/mo, and the minimum required payments on credit cards is $200/mo, your debt-to-income ratio still looks low enough not to cause any issues qualifying for an FHA mortgage.

Overall I'd say your chances are looking good. 

If financially possible, I recommend paying off all credit card debt before your credit is checked, except for maintaining a 2% balance on one card for each of you (or a shared card if it's a joint account), as this will help maximize your credit scores at the time of the mortgage review.  It's called the AZEO method.  Additionally, avoid applying for any new credit, as the impact of additional inquiries on your score will likely outweigh any potential benefits from positive payment history on new accounts.

[CreditNoob]

Thank you for your insight, @ShanetheMortgageMan . Here are answers to your questions:

• Company Tenure & Bonuses:

  • I have been with my company for about three years.
  • I have consistently received a bonus each year.
  • Each bonus has incrementally increased, with last year's being around $30K+.
  • In 2025, I will receive my fourth bonus based on my 2024 performance, but I’m unsure of the amount.

• Financial Obligations:

  • Wife’s Car Loan Balance: $330 remaining.
  • Wife’s Credit Cards: Minimum payments total $300 per month.
  • My Credit Cards:
    • Hypothetically, if I carried a balance, my total minimum payments would be $315 per month.
    • However, as of now, all my credit cards have a zero balance, except for one that carries a 2% balance.