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What are our chances of getting an FHA Approval with the financial information listed?

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Nitrocl
Member

What are our chances of getting an FHA Approval with the financial information listed?

Hello to the board!  I have been trolling on MyFico for quite some time and now have a question for Shane or any of the other Mortgage/Loan officers.  My wife and I currently live in a townhouse in NJ and we would like to make the move to a single family home this year.  Fortunately we do have equity in the home even in the current market but will be trying FSBO first to avoid realtor fees.  The question now is can we get approved for an FHA  mortgage in this tight financial climate or should we wait for a score increase via time/debt reduction.  I have entered all the pertinent information below so that  we can get an educated guess on our approval chances rather than going through the loan pre-approval process and taking a score hit and denial.  Thanks in advance

 

  1. Credit. 

Myself: FICO- Transunion: 636,  Equifax: 651

 

1 medical collection for $430 from May 3rd 2010

1 30 day late 5 Years 7 Months ago

91%  revolving debt ratio

 

Wife: FICO- Transunion: 612, Equifax: 614

1 Medical collection for $100 from 11/2010

1 30 day late on 10/2009

1 60 day late on 10/2010

91% revolving Debt ratio

 

 

2.  Income. 

 

Myself: $55,972.80 per year  + Occasional overtime

Wife: $53,200 per year

 

3.  Source of income. 

 

Both incomes are salary.

 

4.   Monthly debt payments. 

 

Myself: 

Monthly payments:

$155  (credit card)

$182   (credit card)

$92  (joint credit card))

$ 316  (credit card)

$112  (credit card)

$ 55 (joint credit card)

 $1516 (Existing mortgage payment + taxes @ 3% on a 5/1 arm that has changed twice already)

$ 177 (student loans)

$470 (Car payment)

 $342 (joint car payment)

 

Wife:

$92  (joint credit card)

 $26  (Credit card)

 $38  (Credit card)

 $21  (Credit card)

 $104  (Credit card)

 $140  (Credit card)

$112  (Credit card)

 $125  (Credit card)

  $94  (Credit card)

$ 55 (joint Credit card)

$36  (student loan)

 $19 (student loan)

$18 (student loan)

 $19 (Student loan)

 $342 (Joint Car payment)

 

  1.  Employment

We are both W2’d

 

  1. (Assets/Reserves)

Myself: $19,175.91 in 401K

$2,100 in savings

 

Wife: $300 in an IRA and $2000 in savings

 

Location. 

Monmouth County , NJ, Sicklerville, NJ, or Berlin, NJ

 

Property. 

Single family home ( we found one in a new development that is to be built and the others are existing properties.)

 

Value. 

 

The new construction home is $229,900 with about $6500 in taxes

The existing homes range from $199,000 - $240,000 taxes vary up to $10,000, but I am sure that they could be reassessed.

 

Occupancy. 

 

Primary residence

 

Transaction Type. 

 

Purchase

Message 1 of 8
7 REPLIES 7
Anonymous
Not applicable

Re: What are our chances of getting an FHA Approval with the financial information listed?

I am not a professional or anything but I have been researching a lot on the requirements for FHA and VA loans, as we are in the same boat with on the edge credit scores and a few older/sorta recent baddies on our credit report. It looks like you might want to pay off a few credit cards and get your revolving debt down (i'm assumign the 91% means utilization not credit available?) the lower your debt to income ration the better especially with your scores being a little on the edge. That is our problem right now too! I really am getting anxious and want to try and get pre-approved but my husbands truck is a pretty large payment so we are putting every extra penny we can find to pay it off so that it's not included in our DTI.  There are a lot of calcualtors online that you just enter in your monthly revolving debt and your monthly income and it calculates it for you. I am pretty sure it has to be under 41% (including your new mortgage payment) to qualify. I have heard of them going higher but only when the person had very solid scores and a nice amount of reserves. Once you get your utilization down your credit scores should shoot up though! Like I said I am not a professional at all, it's just what I have noticed in researching all the different loans and requirements.

 

 

ps. also you might get more repsonses if you just add up you and your wifes revolving debt and put the total in your post, it's a little easier for people to crunch the numbers if the totals are there already. Good Luck!!! Keep us posted!

Message 2 of 8
Nitrocl
Member

Re: What are our chances of getting an FHA Approval with the financial information listed?

Here are the totals: 

 

me: $1412 monthly debt not including existing mortgage.

 

Wife: $1241 monthly debt not including existing mortgage

Message 3 of 8
203bravo
Established Contributor

Re: What are our chances of getting an FHA Approval with the financial information listed?

Are you selling your current home prior to applying for the new mortgage?

 

You'd be looing at a front end ratio on your combined income of 2638 - easily fits your current mortgage of 1516.  and a back end ratio of 3730 which you currently exceed with total payments of 4169.

 

Your DWs scores are too low right now for her to quaify.. so if you look at thos ratios on your income alone you would be looking at a front end of 1352 which 1516 currently exceeds and a back end of 1912.. and your are currently paying 1901..

 

By selling your current home and if the new mortgage payment is less than 1352 you should easily have no problem with a FHA loan.

Message 4 of 8
Nitrocl
Member

Re: What are our chances of getting an FHA Approval with the financial information listed?

We are going to be selling our home first, but I wanted to find out if her scores were two low to qualify through automated underwriting as I believe they look at the middle score of the person with the lowest scores.  That being said, I don't want to put the house on the market yet until I'm sure that we would get an approval when we do find a new house.  Will underwriting always take the current mortgage into the equation for DTI when applying for a pre-approval?  Is the the minimum FICO now a 620 or 640 for most lenders using an underwriting overlay?

 

I know that Wells Fargo got rid of their overlay but most people get denied anyway due to the strict underwriting criteria.

Message 5 of 8
Booner72
Senior Contributor

Re: What are our chances of getting an FHA Approval with the financial information listed?

My LO said if I was over 620 she could "broker out" the loan and get funded that way, but with a 1% or so higher interest.  I was lucky and blessed enough to get myself to a mid 653 score and my locked rate is 4.5 - but we chose to go 4.75% to get a bigger credit (money to move etc).  I'm very happy with the loan.

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Message 6 of 8
Nitrocl
Member

Re: What are our chances of getting an FHA Approval with the financial information listed?

What was your DTI and did you do the FHA 3.5% down?
Message 7 of 8
Booner72
Senior Contributor

Re: What are our chances of getting an FHA Approval with the financial information listed?

Yes, 3.5%.  I believe my DTI barely scraped by under 43%.  But the computer approved the DTI so I think I'm okay.

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Message 8 of 8
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