Qualify for a Conventional Mortgage???

[Anonymous]

Bankruptcy back in 2011 during the housing crisis, discharged approx 8 months after filing.  FICO score 672- FICO Score 5 (Mortgage) 694.  Recently paid off all credit card debt and should see a little bump as not all cards have reported.

We were qualified back in March for a FHA loan with a credit score of 637.  Is a conventional loan possible?  Figuring that would be our best option to avoid PMI as its not tax deductible and would have to refi out of the loan.

1. Mortgage Credit Scores:
   
   
   • What are your fico MORTGAGEcredit scores for each mortgage applicant? 

Equifax FICO Me: 672 Wife 672 – Both say mortgage score 694

Scores should increase a little as we paid off almost all CC debt and not all have reported.

1. Credit Negatives:If you have any, what negatives are on your credit reports. For each negative, please provide:

Bankruptcy Chapter 7 – August 2011 – Discharged approx. 6 months later

1. Gross Income.  Grossincome (before witholdings, medical/dental, 401k contributions), per your IRS tax returns, is what is important when qualifying, not netincome. 

Me: $60K Wife: $78K

1. Source of income.  Where is the income coming from? List each source.

Both full time employment

1. Monthly debt payments. 
   Credit Card- $100/month

Personal Loan (adoption)- $214 (bal $8500)

Honda Finance Lease - $354 (bal $1771)

Student Loans- Wife $100 Me: Deferred

1. Employment(for those who are employed). 

Me: Full Time/Accountant/1Yr.

BS Accounting

5yrs in industry

Wife: Full Time/Communications Director/2 months

MA Liberal Arts

15yrs in industry

1. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).

• Savings $15K
• Checking: $3K
• 401k: approx. $100K
• IRA
• Stocks
• Bonds
• CD's
• Mutual funds
• Money market accounts
• Any other investment/retirement accounts
• Gift  
• Note: If it is a pension or retirement account that does not permit you to withdraw or take a loan against (other than for hardship), and is only able to be used after you quit or retire, then it cannot be used as reserves.

1. Location:This is to determine govt guaranteed loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.

• Clarksburg, MD

1. Property Description:

• New Construction townhouse

1. Property Value. 

$426K

1. Occupancy. 

Primary Residence

1. Transaction Type.  Is it a purchase, refinance just for better terms, refinance to take cash out, looking for a 2nd mortgage, a reverse mortgage, etc.

We qualify for FHA, however would prefer conventional mortgage

[StartingOver10]

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@Anonymous wrote:

Bankruptcy back in 2011 during the housing crisis, discharged approx 8 months after filing.  FICO score 672- FICO Score 5 (Mortgage) 694.  Recently paid off all credit card debt and should see a little bump as not all cards have reported.

We were qualified back in March for a FHA loan with a credit score of 637.  Is a conventional loan possible?  Figuring that would be our best option to avoid PMI as its not tax deductible and would have to refi out of the loan.

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^^^Assuming the score in red is your mid-score conventional is possible. Depends on the rest of your file. Conventional mortgage loans are score sensitive, but if you are putting down enough to not pay PMI then it is well worth checking into. 

[Anonymous]

1. Mortgage Credit Scores:
   
   
   • What are your fico MORTGAGEcredit scores for each mortgage applicant? 

Equifax FICO Me: 672 Wife 672 – Both say mortgage score 694

Scores should increase a little as we paid off almost all CC debt and not all have reported.

1. Credit Negatives:If you have any, what negatives are on your credit reports. For each negative, please provide:

Bankruptcy Chapter 7 – August 2011 – Discharged approx. 6 months later

1. Gross Income.  Grossincome (before witholdings, medical/dental, 401k contributions), per your IRS tax returns, is what is important when qualifying, not netincome. 

Me: $60K Wife: $78K

1. Source of income.  Where is the income coming from? List each source.

Both full time employment

1. Monthly debt payments. 
   Credit Card- $100/month

Personal Loan (adoption)- $214 (bal $8500)

Honda Finance Lease - $354 (bal $1771)

Student Loans- Wife $100 Me: Deferred

1. Employment(for those who are employed). 

Me: Full Time/Accountant/1Yr.

BS Accounting

5yrs in industry

Wife: Full Time/Communications Director/2 months

MA Liberal Arts

15yrs in industry

1. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).

• Savings $15K
• Checking: $3K
• 401k: approx. $100K
• IRA
• Stocks
• Bonds
• CD's
• Mutual funds
• Money market accounts
• Any other investment/retirement accounts
• Gift  
• Note: If it is a pension or retirement account that does not permit you to withdraw or take a loan against (other than for hardship), and is only able to be used after you quit or retire, then it cannot be used as reserves.

1. Location:This is to determine govt guaranteed loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.

• Clarksburg, MD

1. Property Description:

• New Construction townhouse

1. Property Value. 

$426K

1. Occupancy. 

Primary Residence

1. Transaction Type.  Is it a purchase, refinance just for better terms, refinance to take cash out, looking for a 2nd mortgage, a reverse mortgage, etc.

We qualify for FHA, however would prefer conventional mortgage

[StartingOver10]

Couple of comments:

How much are you putting down?

You can boost your score by having one of your credit cards report a balance between 1%-9% of its credit limit (but greater than $5).  I know it is counter-intuitive, but FICO dings you for all cc's reporting a zero balance.  

I think you are  in great shape to apply for a conventional mortgage, but I am a Realtor and not a LO. Let one of the cards report that tiny balance and see where you are with your scores. I agree with you. Conventional works better in your circumstances. 

[Anonymous]

We can put down up to 5%, little over $20K.  We would prefer less but also want a decent rate if possible.

[StartingOver10]

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@Anonymous wrote:

We can put down up to 5%, little over $20K.  We would prefer less but also want a decent rate if possible.

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Yes, 5% down is a much better interest rate than the conventional loans with 3% down.