Posted on: 09th Jun, 2010 07:01 pm
my wife and I are wanting to purchase a $140000 home. We both have a credit score over 720 but our debt to income is about 48. Can my parents who have excellent credit and the funds cosign on a FHA mortgage to help us purchase the house?
Welcome jeffhutfles,
If your parents have a good debt to income ratio, then they can cosign for your loan and help you in purchasing the property.
If your parents have a good debt to income ratio, then they can cosign for your loan and help you in purchasing the property.
At a 48% DTI, you might be able to get approved without your parents cosigning. I would try without them first.
My wife and I had some credit issues a few years ago that set us back. We have begun to climb out of it and her score is currently 589, which is higher than mine. I've read on different sites that it's possible to get an FHA loan with a score of 580, but I fear it may be outdated. We are looking to get an FHA loan to purchase a home that's about 105K. Her income is 38.5K with a $400 car loan, and two CCs with about 10% utilization. My father recently died and as such I have approx. 30K available to "gift" to her as the down payment. Additionally, my mother has a literally PERFECT credit score(800+) and is willing to be a co-borrower. She receives a pension and Social Security and has an income of 4K+ a month, with utilities and a $500 a month mortgage (which will be paid off in 6-8 months) as her only monthly obligations. Will we be able to get an FHA Loan with my mom as the co-borrower? She has old charge-offs that are probably less than 2K; would it be worth while to contact the CAs and PFD them? My only hesitation is that I don't want to eat into the down payment funds.
Thanks in advance.
Thanks in advance.
There are still lenders that will go down to a 580 credit score. What credit issues did you climb out of? Are you still climbing? What state are you looking to purchase in? At a 580, FHA only requires a 3.5% downpayment.
Depending on what the charge offs are; it might be a good idea to pay them off. From what I've read, adding your mother is definitely a compensating factor that can only help your chances of acheiving financing.
Depending on what the charge offs are; it might be a good idea to pay them off. From what I've read, adding your mother is definitely a compensating factor that can only help your chances of acheiving financing.
Ted,
Thanks for the quick reply.
To clarify, my wife has old charge-offs that are less than 2K. We're willing to pay them off if it will raise her score and get her approved. As to what happened, a lot of issues came up at once. Ultimately, we made a few poor decisions, coupled with four successive years of rent increases and the credit crunch we were over our heads. She has two CCs, both about 2 or 3 years old with a perfect payment history, both paid down to about 10% utilization. We use one for gas, so as not to be tempted to overspend out "allowance". She's also had 2 car loans, 1 in Jan 06 and a recent one in Apr 10, both with perfect payment histories. Our initial plan was to save 25K for a future DP, use 5K to pay down our debt and look in earnest in Spring 2011. I just happened to see a for sale sign in our desired area at an unbelievable price, 53K, which we missed, but it lit a fire and made us start looking; we happened upon an a house that's just about perfect for our needs. We're living with my Mom now which has helped considerably, but she's charging us(ME) $700 a month and we buy groceries and pay phone, cell phone and cable. What's most disheartening is that looking at MY credit, if not for the poor choices I made 3-4 years ago and their repercussions, I'd have zero blemishes on my report.
My mom has no debt with 35-40K in savings. I read that FHA will do 580 with 10% down, but I'd almost rather put 20% down and have the lower payment each month. Dd we walk into the bank and ask for an FHA loan outright or will they offer that when they pull her report. We bank with Chase, who is an approved FHA lender, but are they obligated to offer an FHA loan if my wife meets the general guideline of 580 and 10% down.
Thanks again.
Thanks for the quick reply.
To clarify, my wife has old charge-offs that are less than 2K. We're willing to pay them off if it will raise her score and get her approved. As to what happened, a lot of issues came up at once. Ultimately, we made a few poor decisions, coupled with four successive years of rent increases and the credit crunch we were over our heads. She has two CCs, both about 2 or 3 years old with a perfect payment history, both paid down to about 10% utilization. We use one for gas, so as not to be tempted to overspend out "allowance". She's also had 2 car loans, 1 in Jan 06 and a recent one in Apr 10, both with perfect payment histories. Our initial plan was to save 25K for a future DP, use 5K to pay down our debt and look in earnest in Spring 2011. I just happened to see a for sale sign in our desired area at an unbelievable price, 53K, which we missed, but it lit a fire and made us start looking; we happened upon an a house that's just about perfect for our needs. We're living with my Mom now which has helped considerably, but she's charging us(ME) $700 a month and we buy groceries and pay phone, cell phone and cable. What's most disheartening is that looking at MY credit, if not for the poor choices I made 3-4 years ago and their repercussions, I'd have zero blemishes on my report.
My mom has no debt with 35-40K in savings. I read that FHA will do 580 with 10% down, but I'd almost rather put 20% down and have the lower payment each month. Dd we walk into the bank and ask for an FHA loan outright or will they offer that when they pull her report. We bank with Chase, who is an approved FHA lender, but are they obligated to offer an FHA loan if my wife meets the general guideline of 580 and 10% down.
Thanks again.
Hi STB,
Your mother needs to contact the lender and apply for an FHA loan. The lender will not automatically give it to her. If she has a credit score of 580, she should contact the local FHA approved lender and apply for a loan.
Thanks
Your mother needs to contact the lender and apply for an FHA loan. The lender will not automatically give it to her. If she has a credit score of 580, she should contact the local FHA approved lender and apply for a loan.
Thanks
Sorry, to clarify again. It's my wife with the 589; my Mom's score is over 800. We're trying to avoid using her if at all possible. We're contacting an FHA-approved lender today and plan to lay the situation out to him.