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Would I qualify for a USDA home loan?

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Would I qualify for a USDA home loan?

I've been reading this forum for months now soaking in all of the USDA info that i could but i have never posted.

 

My boyfriend and I are 21 and wanting to buy a house in the $140,000 range together in Texas.

 

Me:

With employer for 2 years in December of this year.

Salary is $26,000 a year and i make around $5000 in commission a year (just started earning commission in August)

According to credit karma (which i know isn't accurate) my TU score is 667 & my Equifax is 654.

I have 2 credits cards (Care credit $973.77 out of $3000 limit) (Capital One $1257.60 out of $2800) I am paying these off as quick as i can.

I have a car loan that's $344 a month and we have a joint loan that's $430. The minmum amount of CC payments i have a month is $75.

 

Him:

With employer for a year in November, never had a gap in employment.

He makes around $25,000 a year w/o overtime (he works around 70 hours a week until winter comes around) he gets overtime over 40 hours and it's $18 an hour so i'm not too sure on how to calculate his income.

Credit Karma shows his scores are TU 642 and Equifax is 626.

He has 2 credit cards (Capital one $421 out of $1800) (Gander mountain is $350 out of $500) he is also working on paying these off completely, neither of us use our credit cards for regular spending, only emergencies at this point. Minimum payments for his are $50.

He is on our joint car loan that is $430 listed above on my portion.

 

We have no late payments or collections or anything bad on our record. We both have one closed auto loan each due to me paying off my car and he refinancing his. We pay all of our bills on time every month.

 

Right now we live in apartment and pay $650 for rent. We don't have much in savings. Any advice would be appreciated, just wanting to know if it's even possible to be approved before i risk the hard pull! Thanks in advance!!

 

 

 

 

 

Message 1 of 5
4 REPLIES 4
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Community Leader
Super Contributor

Re: Would I qualify for a USDA home loan?

Welcome
First, I want to give you a link to a mortgage calculator http://m.mortgagecalculator.org; and second, as you know, CK is not an accurate representation of your credit score. So here is the link to Credit Check Total https://www.creditchecktotal.com for $1 for 7 days. Every thing from here on is IMHO only. I'm concerned about the "We don't have much in savings." To buy a house, there is down payment, which can be at least 3.5% (I think 0% USDA) and closing costs, which can be at least 5%, although the seller can contribute to this. So saving funds for these two things is a must. Am I reading correctly that there are two car loans totaling $774/month? If the answer to this question is yes, then your DTI is extremely high and this isn't even counting your minimum CC payments. When getting a mortgage, it consist of PITI -- principal, interest, taxes and insurance; and if it's a FHA mortgage, PMI insurance is required. A debt ratio greater than or equal to 40% is generally viewed as an indicator you may be a high risk borrower. Also, a monthly payment — including PITI— should be 29% or less of your monthly income. Other monthly debt payments you make cannot exceed 41% of your income. However, the USDA will consider higher debt ratios if you have a credit score above 660, which again, don't use CK. So if I were you, I would definitely work toward saving money for down payment and closing cost. I would definitely continue to pay down all credit cards -- especially between the two of you having one CC at 0 balance and the other one at less than 9%. And again, if there are two car notes, I would consider maybe having only one car note if possible. I hope my suggestions help you on the start to home ownership and good luck.


DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799
DEC 2017: EX 775, TU 778, EQ 769

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Message 2 of 5
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Moderator Emerita

Re: Would I qualify for a USDA home loan?

CCT does not provide mortgage scores.  You can only get mortgage scores here on MyFICO or at a mortgage lender.  Please read the stickies above to learn about mortgage scores.

 

CK scores have no relationship to the scores used by mortgage lenders at all. Ignore CK. 

Message 3 of 5
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Established Contributor

Re: Would I qualify for a USDA home loan?

USDA is 0 down but you pay earnest money, inspection (optional) and appraisal upfront. Our lender had us ask for 4% in lender concessions (prepay and closing costs) average is 3-5% for closing costs. You may qualify for direct loan which goes for low income. 29/41% DTI is correct except for direct which has a higher DTI and also has a subsidized interest rate. Please go to RD.USDA.gov and find a authorized lender. There you can also read the lender hand book for both their direct and guaranteed loan programs.

Our our of pocket total for our USDA guaranteed loan was $1350.00. If you qualify it is a great program. Remember both you and your property must qualify.
Message 4 of 5
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Established Contributor

Re: Would I qualify for a USDA home loan?

I do not believe they will count overtime or commission unless it has been in place 2 years and there is a guarantee it will continue. More than likely they will go strictly off base salary.
Message 5 of 5
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