USDA Qualification

[Anonymous]

My wife and I are looking to purchase our first home together and I would just like to get some feedback on our current credit situation to see if there may be any unexpected roadblocks!

I will follow the suggested outline for providing our background information.

We are applying for a USDA mortgage with no money down.

1. Credit

Wife-Equfax/FICO classic v5 -762, Transunion/FICO Classic (04) - 742, Experian/Fair Isaac ver 2 - 776

Me- Equfax/FICO classic v5 - 680, Transunion/FICO Classic (04) - 677, Experian/Fair Isaac ver 2 - 678, i have previously had some late payments (30,60) back in 2007-2011, and had a vehicle repossessed back in 2011. Just got a Cap One secured credit card back in 2013, and used it responsibly and rarely carried a balance. Just got approved for a Cap One Quicksilver ($3,000) card as well. I do also owe back federal income tax from the 2008 and 2009 tax years. Approximately $10,000 combined. There is no lien and I do not have a payment plan in place. It is not on my credit report.

2. Income

Wife-$42,000 annually

Me-$45,000 plus commission (approximately 3-5,000 per year)

3. Source

We are both W-2'd employees

4. Monthly Debt

Wife-student loan payment obligation of about $450, and 2 car loans ($280 and $175)

Me-None

5. Employment

Wife-Social Worker

Me-Personal lines insurance service/sales

6. Assets/Reserves

Combined-Approx $10,000 between checking and savings

7. Location

Property is located in Sykesville, MD (Carroll County)

8. Property

It is a townhouse style condo. 3BR's 2.5BA's, new construction

9.Value

Purchase price is approximately $255,000

10. Occupancy

Primary residence

11.Transaction

USDA mortgage (hopefully)

If anyone has any insight or recommendations, please feel free to share! Thanks all.

[frugalQ]

your scores look to be ok.  i don't know the mortgage rules around repossessions, but if it shows a zero balance, it may be a non-issue.

you will definately have to address those taxes...seems like i read somewhere that you can't have an outstanding tax bill when going through USDA..i could be wrong.  at the very least, though, you will need to get under an installment agreement to pay.

use this mortgage calculator to determine who much you will be able to borrow.  you can play around with the numbers as you like.

http://www.myfico.com/CreditEducation/Calculators/how-much-can-i-borrow.aspx

good luck!

[Anonymous]

I'm not sure about MD but we make a little bit less than you and we didn't qualify because we make too much money.

[DaveInAZ]

Well, start here: http://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans

Scroll down and you'll find links to check if your income qualifies, and also a link to enter the address of the condo to see if it's elegible for a USDA mortgage.

Your credit & DTI (Debt to Income ratio) should be OK, but you;ll have to address those taxes, if you own money to any federal agency you need to have an approved payment plan.

And you can't have more than $5k in lquid assests in non-retirement bank accounts, because you have to show you can't get "traditional financing", like a conventional mortgage. You can do things like move excess to an IRA, or put it into something like a CD, as then it's no longer considered "readily accessible" funds.

And you might want to consider other mortgage options, USDA is a long & compolicated process, and there are other options with low or no down payment. FHA requires 3.5% down, but a (motivated) seller can contribute up to 6% of selling price to cover your closing costs. But I don't recommend FHA as there is an upfront fee of 1.75%, which can be wrapped up in the loan amount, but there's also an .85% insurance fee included in the monthly payment that remains for the life of the loan, even after when you pay it down/property value rises to where you mortgage balance is less than 80% of the value of the property. But you can get a conventional loan with as little as 5% down with no limit on how much a seller can contribute for closing costs. Any mortage with less than 20% down requires mortgage insurance, but with a conventional mortgage once your balance is less than 80% of value you can get it removed

[Anonymous]

Depends on what type of usda loan you get, Guaranteed or Direct.

Guaranteed is the easier of the two.

Find a USDA loan officer in your area and start asking questions.

Call at least three and ask the same questions. Each lender has different guild lines.

I had a 09 bankrupcy and a student late on my record (2010) with a cedit score of 701. Debt ratio was below 23 percent.

I was easily able to obtain a USDA Guarenteed loan and am now the owner of my own home.