Questions about getting a mortgage.

[Anonymous]

Hello, this is my first post on here, so I want to thank everyone in advance. First a little about us. I am 26 and my wife is 24, we will be married for 6 year in May, and we just had our first baby in Nov. We live in orlando florida. We have wanted to buy a house for awhile now, and since we just had the baby, we really want to try and get one now. I have a few questions. As of right now my wifes fico is about 700 and mine was 630 about 2 months ago. We will be first time buyers. Our income last year was $54,000, and that is with her taking half of november and all of december off, and we have both gotten $1 and hour raises since last year. So right now we gross somewhere around $4300-$4700 a month. I've been at my job for almost 3 years and my wife at hers for almost 2. We have 2 car payments, mine is $507 a month and hers is $517 a month. I pay about $150 a month in student loans and hers are in deferment because she is still in school. Our credit cards monthly minimum payments add up to around $150 a month, but we always pay more than the minimum of course. As of right now we pay about $1350 a month to rent. We've been looking at houses for awhile and we have found a few we really like. The prices range from $115,000 - $130,000. Is there any chance that we could get approved for a mortgage in this price range?

[Anonymous]

My situation is similar but your debt and income are both a bit higher. We were approved FHA for $110,000. My husband makes 45,000 a year, I'm a full-time student. We pay child support for his daughter at $355 a month, a car payment of $181, credit cards are about $50, and a personal loan of $168.

With a couple they take the lowest middle score at the couple's score.

My husbands 680 684 655

Mine 650 680 661

His middle = 680, my middle = 661. So our score together is based on mine because it's lower = 661.

FHA is changing their requirement from 600 to 620, so your score might be an issue if your middle score is lower than your 630.

Personally i'd pull my 3 credit scores first just to find out because it doesn't go againt you as an inquiry. But you could just go to a lender and have them pull your scores too.

Your two car payments are a bit high, so your debt to income might be a problem. I'm still too new at this to tell for sure but thought i'd share my similar story

[Anonymous]

Thanks for the info. Anyone else?

[Anonymous]

I have just run your numbers through a mortgage calculator and it's bad news. Your debt ratio is too high.

With a monthly income of $5700 and with only 1 car payment it would be possible.

I'm not an expert just a guy with a calculator. :-)

[Anonymous]

Yeah, with 2 car payments that high you will not be able to qualify for a mortgage.  to show you what to look for, standard guidelines say your DTI ratio (debt-to-income) has to be under 43%, and with variable income (recent pay changes and your wife being off work for a couple months they will likely use an average earnings or the low end of you  estimate) so:

4300 income at 43% = 1849

1849 allowed debt

507 (car)

517 (car)

150 (loans)

150 (cc debt)

505 left over for house payment.

Dont; take this the wrong way, but coming from someone who has 2 similiar car payments and kids, you are going to be stretched really thin.

4500 income

1350 rent or mortgage

507 car

517 car

150 loan

150 cc debt

1826 left after debt and rent/mortgage

That is really tight when you add insurance, gas, groceries, utilities, diapers, etc.  Buying a house right now would be setting you up to be 1 emergency away from financial disaster.  I have had this same dilemna and am glad I waited unitl I got a car paid off and my wife was making a little more money.  Even if you could get approved now (which you could not), I would try to get one of the cars paid off ASAP to get that payment off your back and then get the CC paid off.  Hopefully by then you will eb in a better position to do something.