Need guidance - Path to qualify

[Insomnium7]

Greetings everyone! I have been reading through this forum for some weeks now because my fiancé and I are trying to figure out which direction we would like to take. 

We are in OK and looking to buy in OK. Our combined yearly incomes total out to be a base of 121k a year. I am a nurse and work a lot of overtime so our pay will be closer to 145k by the end of the year. Don't necessarily need that extra because we don't want to purchase over 350k. Going to provide some credit info on myself and my fiancé.

My debts as of 5/15 and what was reported then with limits and balances:

Open -

Student Loan - $22508 - $21564

Fortiva Credit - $2000 - $963

USAA Credit (Secured) - $1000 - $635

CreditOne - $550 - $50

Comenity/Ulta - $250 - $0

Sychrony/MathisBros - $2200 - $0

Closed -

ACIMA - $849 - $0

CFCU (Car) - $30290 - $0

Manufactured House - $30290 - $0 (Sold to fiancé)

Collections -

ERC - $345 - $0 (They refuse to delete) : 11/19

ARS (1:Medical) - $226 - $226 : 5/22

ARS (2:Medical) - $110 - $110 : 5/22

FICO 5, 4, 2

Equifax : 653

TransUnion : 668

Experian : 688

Current-

Fortiva - $0, waiting on them to report.

USAA - $24 Reported

Both ARS deleted and have letter of proof.

I have no late payments. AAoA is 2y10m.

Now on to my fiancé debts 5/15:

Open-

Manufactured House - $29933 - $26058

Discover (Secured) - $300 - $79

GM Financial - $16379 - $11038 (6 - 30 late >2y)

AU -

My USAA - $1000 - $653

Closed -

Line5 - $800 - $0

TFCU (Loan) - $2000 - $0

TFCU (Loan) - $1000 - $0

Charge Off -

Capital One - $3893 : (DLA: 5/17)

Kohls - $300 - $0 : (DLA: 2/18)

FICO 5, 4, 2

Equifax: 637

TransUnion: 615

Experian: 629

Current-

Discover - $10

AU USAA - $24

Total lates including charge offs:

30d - 9, 60d - 3, 90+d - 5

AAoA is 6y4m but Equifax says 5y2m (I think the manufactured house reports there)

So all in all, this is a lot of information. How can I help my fiancé increase his scores so we can qualify for better rates? We are working with a broker and she gave a commitment for up to $370k to a builder we are considering buying from (this is lower than our income qualifies because she had to average fiancé's commissions and couldn't accept my shift differential yet) I’m mostly concerned about what we could to to help him, because the broker said they will use the lowest middle score. She told us that we need to keep a low balance on all of our credit cards (minus retail), but I’m concerned because this doesn’t follow the AZEO method. I also needed to know if it’d be beneficial to have my fiancé get one more card to increase his utilization ratios d/t the charge off. (Broker told us not to touch it).

I’m also curious about USDA loans because we are considering buying more rural as opposed to the metro. I looked up guidelines for income qualification and it looks like our pay could qualify if they let us deduct childcare expenses and child support if that’s even a thing.

Lastly, the seller we are working with of the home builders told me that recently OHFA recently pulled funding from their down payment assistance program. Is this true? I was looking into potentially applying for the Dream Government program here in Oklahoma. Any help would be appreciated, I know I’ve said a lot. I love this forum and how informative it is! Thanks in advance!

[ShanetheMortgageMan]

There are far better people to give you advice on credit scores, but at a glance it seems your fiancé needs to establish more revolving accounts, can you add him as an authorized user to your other credit cards?   Also needs to reduce utilization on revolving accounts he currently has (Discover + your USAA), from what I've read it seems the AZEO method has the best results.

Not sure about funding for the OHFA program but you can call them direct at https://www.ohfa.org/contact-us/

USDA allows deducting childcare expenses if it enables a household member to work, seek employment or go to school and no other adult household member can care for the child.  https://www.rd.usda.gov/files/RD-SFH-ThreeTypesofIncome.pdf provides a detailed description of what deductions are permitted and how to calculate annual income to determine if it's within the eligibility limits.

[sgomez1325]

As far as the medical bills, I would have him pay those off. New laws are coming into effect this year and if you have less than $500 and its paid, it will get deleted. Removal of those would probably boost his score significantly

[ShanetheMortgageMan]

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@sgomez1325 wrote:

As far as the medical bills, I would have him pay those off. New laws are coming into effect this year and if you have less than $500 and its paid, it will get deleted. Removal of those would probably boost his score significantly

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From the way I'm reading it those medical collections are on Insomnium7's credit, not the fiancé's credit.

[TheKid2]

I will leave it to the mortgage brokers here to confirm, but if you want to be combined on income / qualification they will look at your "worst middle score". That is your fiance right now.

Having gone through this I will advise on maximizing Mortgage scores.

- Settle his Cap1 CO first. See if they will negotiate a settlement and get that balance due to $0, even if you "Settle for less". A past due balance on a CO is extremely penal. Don't worry about the Lates tied to CO account, you're taking the worst penalty anyway.

- Get all his revolvers to AZEO. Pay off completely all the cards he is an AU on and let him leave like $10 (be sure it's leass than 9%) on his Discover. All other revolvers he should be at $0.

You can practice AZEO too, leave a small balance on say your USAA card, all others at $0.

I believe this is your shortest path to maximizing the mortgage scores, otherwise it's going to be time. I wouldn't apply for more credit, but will leave room for others to comment since I think the AUs count towards the mortgage scores as if they were his cards. All the AU algo stuff appeared in later FICO versions, so I don't think this would maximize your newer scores.

Good luck!

[homeloanexpert]

@Insomnium7

Checking in with you. Do you have a stategy and a plan in place to get to the closing table?

[Insomnium7]

@homeloanexpert 
We don't have a specific plan yet in place. I really do need some guidance if we should wait it out to fix some things on our credit for a potential at a better interest rate... Or if interest rates are just going to continue to climb so it won't matter anyways? I know there's no specific way to predict this stuff, but we really need to get my fiancé's middle score higher. Any help/advice with doing that would be extremely helpful.

[homeloanexpert]

@Insomnium7 

Why? At 620 that's high enough. We can down to 580 on USDA RDL's 

[DSTforlife]

Are you able to qualify for the loan without your fiancé?   It appears you have the scores, and if your DTI is low enough, you can get the mortgage alone and just add your fiancé to the deed. 

My DH and I refinanced our house and did  it this way because we didn't want us both saddled with a mortgage on our credit reports.   We both have good scores, and we were trying to think strategically. 

I don't know if it's an option with USDA loans, but I wanted to put it out there. 

[Jblack469]

Have you tried the Chenoa Fund program? Both of your scores could get you DPA  FHA. It's a National program.