Please help us know if we qualify?

[Anonymous]

Hi, all.  I'm hoping the experts here can tell me if we qualify for a martgage.  Here's our situation:

In 2014, both me AND my husband were finishing teaching degrees.  I graduated in December 2014 and started teaching January 2015.  My husband graduated in April 2015 and started teaching August 2015.  In 2014, we did not work much due to student teaching.  So our total income for 2014 was about $6000 because I was only able to substitute teach occasionally when I wasn't student teaching.  We mainly lived off of savings.  We both just renewed our teaching contracts to continue teaching at the same school districts next year.  

Question #1:  Since we have not been teaching 2 years yet and our income was so low for 2014, will this hinder us even though we have signed contracts for next school year?

Also, we both have student loans.  My husband's IBR payment is $0 right now.  So, I know that 2% of his balance will be calculated as his payment, which is $840.  I'm in the process of consolidating all of my student loans and my IBR payment will be $210.  So, combined our IBR payments will be calculated as $1050.  (By the way, we file taxes seperately.)

Question #2:  Will lenders accept my IBR payment of $210 if it's what is reported on the credit report?

Our student loans are the only debt we have, so our DTI should be around 17% if we use $840 for my husband's student loan payment and $210 for mine since our gross monthly income totals $6500.

Our credit scores are all above 700 and we plan to apply for an FHA loan.

If you need additional information, let me know.

[Anonymous]

Any advice is greatly appreciated!

[GirlMelanie89]

Hi!!! Welcome the forums!!

My understanding is that a LO will use your current income since it's not commission based employment. Your DTI is good and your scores are good as well so I don't see an issue being pre-approved.

The IBR shouldn't be a problem if you're going FHA. Someone just posted recently that USDA doesn't take IBR payments anymore and some conventional lenders may have a problem because it doesn't amortize the loan.

[Anonymous]

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@GirlMelanie89 wrote:
Hi!!! Welcome the forums!!

My understanding is that a LO will use your current income since it's not commission based employment. Your DTI is good and your scores are good as well so I don't see an issue being pre-approved.

The IBR shouldn't be a problem if you're going FHA. Someone just posted recently that USDA doesn't take IBR payments anymore and some conventional lenders may have a problem because it doesn't amortize the loan.

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Thank you very much for your reply!

[GirlMelanie89]

You're more than welcome!!! Do you know if you're going conventional or FHA yet? 

[Anonymous]

We will likely go FHA since that's probably all we will qualify for due to our student loans.  

[GirlMelanie89]

FHA is very promising and with your scores, you'll get a really good rate! Good luck and feel free to come back with other questions or comments!!!! Good luck and prepare for the ride!! 

[Anonymous]

Thank you!  Have you recently purchased a home?

[GirlMelanie89]

Lol. Not yet. I'm currently in the process. 

[Imperfectfuture]

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@Anonymous wrote:

Thank you!  Have you recently purchased a home?

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You will need to get the DTI down, they will calculate 30% for front end.  The DTI you are talking about will be applied to house payment, making back end 47%.  That is a bit high.  They will accept your current income with the renewed contracts.  Be careful, government programs are making changes to IBR payments.  Unless regular payment, then they take 1% of loan amount.  Get husband into repayment before apply.  It will be better if you folks file taxes together.