My chances of getting approved

[risefromdebt]

Hi all I have been working on rebuiling for the past 3 years and I want to try for a mortgage around Dec. 1.   My finacial situation is as follows....

Income = 69,528   and 40,000 in savings

Debts =  Zero    credit card debt (all ballances are 0)

               95,000 Student loan debt (65.00 monthly payment)

               1,175   rent

               574.00 car payment

               66.00  IRS payment 

               100.00 Credit union loan

Credit    1 collection = 190.00  from 2013

               1 charge off from 2015 = 12,581  have tried to negotiate settlement with westlake via mail but no communication

               5 late payments on student loan account in 2014 

               1 60 day late payment in 11/2018

               1 30 day late in 06/2019

mortgage Credit Scores from myfico 

590

613

635

The biggest issue i'm having is qualifying for the amount of mortgage I want (390,000). Academy Mortgage says becuase of my student loan and credit scores I would have to go with FHA and they require they use 1% of my loan amount. I don't want to go with FHA becuase I want to use my student loan payment of $65 to include  in my DTI.   Is the lender giving me the correct info or are there other options?  Myfico states I'm only 7 points from qualifying for a conventioal loan.  I'm not sure what to do to get those 7 points when all my credit cards are 0 balance.  The savings I have I have reserved for downpayment.  Do I even have a chance to get a mortgage or is it just wishful thinking on my part?

[AllZero]

Your'e getting the all zero penalty points. You want all zero except one card to report a small balance eg $10-$20. You should find your ~7 points next report.

[risefromdebt]

Thank you!  You made my day!

[pgtackle2003]

Seems like the first lender told you is you won't qualify for conventional mortgage with those scores and DTI. Basically you have too much debt for your income, so it seems a conventional loan will be out of the question. If purchasing a home for 397k your payment would be somewhere around $2100 - 2300 range. 

  I do believe there are convential mortgage options out there you can do with 3-5% down, since you have so much saved. But with your scores I am not sure if you can get conventional. The issue is with a projected payment of $2100 this puts your backend DTI at around 52% (even with using $66 student loan paymennt). FHA has a maximum ratio 43% I believe.

Lastly that 30-day late from June might be hard to get around. Almost all lenders want to see at least 12 months of no lates.

My best advise would be to wait until July of 2020 making sure you have no further lates. Also do as suggested and carry a small balance on one CC.

[MauiMan85297]

Recent late won't help you and your DTI is high for Conventional, yes you qualify to look at Conventional at a 620 score but it will be costly and an ugly rate to boot.