Posted on: 13th Sep, 2009 10:20 am
Hello! My husband and I are thinking of buying our first home somewhat soon. I just ordered my credit report and checked my FICO score through Equifax. My credit score is currently 678. On the main display page of my score report, it said that qualified as a "Good" rating. However, when I printed the report, the rating suddenly changed to "Poor" (but the number was the same).
Do you think I'd be able to qualify for a home loan with my credit score?
Other pertinent information about me:
-- I had two collections, but both were paid in full some time ago. One was a small retailer credit card balance from 2004 -- at the time I was unmarried, making very little money, and living with a roommate who couldn't afford her half of the rent (so I ended up paying it for her). I paid that balance in full as soon as I was able. The other was a medical bill incurred around the same time; it has also been paid in full.
-- My husband's credit score is slightly higher than mine.
-- We have $20,000 saved for a down payment.
-- We both have steady jobs and together make $87,000 per year. He has worked for the same company for 11 years; I've been at my company for over 3 years.
-- We have no debt. We pay off our credit cards each month.
-- Neither of us has taken out a loan before. (We've always bought used cars and paid cash for them.)
-- We live in California. We'd probably be looking at houses in the $250,000 price range, but that's adjustable of course depending on how much we qualify for.
Thanks for your advice!
Do you think I'd be able to qualify for a home loan with my credit score?
Other pertinent information about me:
-- I had two collections, but both were paid in full some time ago. One was a small retailer credit card balance from 2004 -- at the time I was unmarried, making very little money, and living with a roommate who couldn't afford her half of the rent (so I ended up paying it for her). I paid that balance in full as soon as I was able. The other was a medical bill incurred around the same time; it has also been paid in full.
-- My husband's credit score is slightly higher than mine.
-- We have $20,000 saved for a down payment.
-- We both have steady jobs and together make $87,000 per year. He has worked for the same company for 11 years; I've been at my company for over 3 years.
-- We have no debt. We pay off our credit cards each month.
-- Neither of us has taken out a loan before. (We've always bought used cars and paid cash for them.)
-- We live in California. We'd probably be looking at houses in the $250,000 price range, but that's adjustable of course depending on how much we qualify for.
Thanks for your advice!
With 678 you will be able qulify for home loan if you cna show good income and low DTI
The collection call may have some effect on your interest rate, othena than that you shoudl be ok
The collection call may have some effect on your interest rate, othena than that you shoudl be ok
Any suggestions on what kinds of lenders we should talk to? Should we talk to the major banks in our area (like Chase), or are there other types of lenders for home loans as well?
Hi Bonnie,
A credit score of 678 is definitely a good score, given the fact that most of the homeowners are struggling with bad credit in this market. To qualify for an FHA loan you need a score of 620. Thus, you can easily qualify for an FHA loan, provided you meet the other required criteria. However, if you want to go for a conventional loan, you need a score of something around 720.
FHA loans require you to put down only 3.5% of the purchase price. So, I believe your $20,000 saved money should be able to take care of that. Your combined income looks good and the fact that you do not have large debts makes sure that you debt to income ratio remains within the qualifying limit.
The collections will not impact on your eligibility for the loan as you have already paid them off. Just make sure that the collection which you have paid off, are reported properly to the credit bureaus. In a nut shell, things are looking good for you and I believe you should not have any problem in qualifying for a loan.
What I can suggest you is, contact your local lenders as soon as possible. Apply for a loan and see what kind of mortgage quotes they can offer you. There are lenders in this community as well. So, you can go for a no obligation free mortgage quote with them. They will assess your financial situation, credit scores etc will offer you a free mortgage quote. This will help you have a few options from which you can choose the one that suits you the best.
A credit score of 678 is definitely a good score, given the fact that most of the homeowners are struggling with bad credit in this market. To qualify for an FHA loan you need a score of 620. Thus, you can easily qualify for an FHA loan, provided you meet the other required criteria. However, if you want to go for a conventional loan, you need a score of something around 720.
FHA loans require you to put down only 3.5% of the purchase price. So, I believe your $20,000 saved money should be able to take care of that. Your combined income looks good and the fact that you do not have large debts makes sure that you debt to income ratio remains within the qualifying limit.
The collections will not impact on your eligibility for the loan as you have already paid them off. Just make sure that the collection which you have paid off, are reported properly to the credit bureaus. In a nut shell, things are looking good for you and I believe you should not have any problem in qualifying for a loan.
What I can suggest you is, contact your local lenders as soon as possible. Apply for a loan and see what kind of mortgage quotes they can offer you. There are lenders in this community as well. So, you can go for a no obligation free mortgage quote with them. They will assess your financial situation, credit scores etc will offer you a free mortgage quote. This will help you have a few options from which you can choose the one that suits you the best.
bonnie, what you want to do insofar as lenders are concerned is to find someone with whom you connect. you want someone who will be your advocate throughout the process, who has expertise in credit and can advise you on that, who can advise about the appraisal/value process and make you comfortable in what you're doing.
one of the best ways to obtain such a lending professional is to check with friends and/or family who've been down the mortgage road before. realtors all have favorite lenders to whom they'll recommend their clients. you can do alright with a local bank's loan department also, but be sure you develop a rapport with whomever it is - you're going to have lots of questions, and you need someone with patience, kindness and plentiful knowledge to guide you.
one of the best ways to obtain such a lending professional is to check with friends and/or family who've been down the mortgage road before. realtors all have favorite lenders to whom they'll recommend their clients. you can do alright with a local bank's loan department also, but be sure you develop a rapport with whomever it is - you're going to have lots of questions, and you need someone with patience, kindness and plentiful knowledge to guide you.
i have a bankruptcy with a credit score of 644 would i be able to get a loan
joemac....yes as long as you meet the other qualifications
I hope someone can help answer this for me. When calculating DTI, how are collections calculated? My husband will be purchasing a home doing an FHA loan but I recently did a shortsale against the property in my name and have medical collection accounts against me that refuse to settle or even negotiate. I'm being told that my collection accounts count against his DTI but how do they calculate it, if my collection accounts have not arranged a monthly payment amount? I was under the impression that DTI could only be calculated by adding up monthly payment amounts and dividing that by gross monthly income. Am I missing something? Besides what if my collection accounts never settle and then eventually charge off after several years of inactivity. It has already been 3 years and still nothing. Oh and I am in a community property state but everything that I have seen doesn't require the non purchasing spouse to include or even require collections to be paid off for FHA standards but this is a requirement of the Big Bank we are using. Can someone help me understand how this works?
Hi Stephanie,
The collections will be considered as your debt and can increase your debt to income ratio.
The collections will be considered as your debt and can increase your debt to income ratio.