Take a look at my Profile and situation - Can I secure a 30-40k mortgage a year from now?

[dparhanr]

Just a little background on me, I am 22 years old and currently work full time. I am interested in buying my first house as soon as possible. I am interested in an extremely small, cheap, dated, house in my home town where values are low and I would have plenty to choose from, and not necessarily a foreclosure. I would like to take it on as a project, make it nice, use it as our first starter home. I will then want to pay it off as quickly as possible and add it to my long term investment portfolio after we move on and buy our first real house. I am not looking to flip it or turn and burn it into a super aggressive income property. I have the skills and connections to handle everything my self, and at 800-1,000Sq feet it will not be an overwhelming project. Anyway, that is a little about why I am interested in such a cheap house.

My credit right not is thin, but it is really taking off right now and I am working hard to make this a really good year credit wise. 

Gross income = 25,000 today it will be in the 28-32,000 range when I apply for this

Employment = When I apply I will have been at my current job for 2 years

Current Fico score = 617

No negs other than inquiries

1 credit card - Secured with a $300 limit 

1 student loan - $5,500 (In deferment)

1 auto loan - $7,300 

I can either afford to pay off that auto loan in the next year, or stick to my payment schedule and have an extra 5K in the bank. My oldest account (now) is only a year old, and my newest is only a month old. The credit card will hit the 6 month mark in the next month or two. I plan to perfect my utilization, and apply for a couple unsecured cards in in a few months.  If I am not approved for an unsecured card or two I will continue to work on my revolving credit with secured cards. 

My girlfriend of 4.5 years is wrapping up her final semester of grad school right now. I guess whether or not she is on the application will depend on what she brings to the table at that point. Her credit is thin, but I will start helping her work on it. Employment wise, she might be in a transition phase job making 20k or she might walk right into a 50,000+ job here in a few months.

I am just looking for some input on my situation. Is there any chance I will be approved for this very small mortgage a year from now?

[BrianB_The_Loan_Professor]

I would work on one more trade line if the plan is to wait a year

Clean up whatever is causing the score to be low

If you do you will have more option

As it is you are close to being eligible for USDA or FHA

Good Luck

Brian

[jasonnewrate]

If you want the best pricing try getting your score up a little higher. Some lenders have overlays that allow no credit at all. But if you want to get a fair mortgage deal, get your fico up higher. 

[Revelate]

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@BrianB_The_Loan_Professor wrote:

I would work on one more trade line if the plan is to wait a year

Clean up whatever is causing the score to be low

If you do you will have more option

As it is you are close to being eligible for USDA or FHA

Good Luck

Brian

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+1

Get another credit card: 2 revolving + 2 installment, your own little Noah's Ark of credit establishment .

Cute turn of phrase aside, adding a second card (revolving tradeline) will likely be a straight boost to your FICO and given that you have a year for the tradeline to age, and for the inquiry penalty to fade, you'll do yourself both FICO and underwriting favors by getting it looking a year down the road.  May even want to get a third card but that's not strictly necessary but as your file is thin it'll help build payment history faster which is nothing but goodness as a loan in deferrment may not be adding any.

[irvinfitness]

I'm going to address the co-applicant aspect because no one else has.

You should refrain from adding your girlfriend to the application even if it would help you qualify. Unless you are married before then, it really doesn't matter how in love you are with each other, don't apply for it jointly. That is not to suggest that you won't be together forever, it is just some wise counsel for you. Financial things outside of marriage (read marriage and not engagement) should be kept completely separate, especially for large purchases such as loans or financing large purchases. 

If someone told me this a year ago, when I was engaged, I would have laughed in their face and told them they had no idea what my relationship was like and that being a financially savvy individual, it only made sense to save $$$ or secure things for the future by whatever means necessary. Every relationship is different, but never jeopardize your relationship or your future life by complicating it financially. 

I think you are on the right track to getting approved for the mortgage. As others suggested, adding an unsecured revolver and letting it age is a great idea. I would also not pay off the auto loan before applying. You could pay it down significantly, but keep that variety on your report for now. If you let those accounts age, your profile and score will be looking great in a year. Good luck!