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Condos are becoming FHA no-lending zones
As the result of policy changes at the federal level and decisions by condominium boards of directors, and thousands of communities have essentially become prohibited lending zones for the FHA in the last several years. Related story: Title restrictions …
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203K Loan: FHA 203K Mortgage Programs (Section 203 Standard, rx Streamlined)
Planning to buy a fixer-upper, what is ed or make improvements to your existing home? The FHA 203k loan may be your perfect home improvement loan. In combining your construction loan and your mortgage into a single home loan, the 203k loan program limits your …
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NY Times: FHA Loans Are Better with Housing Counseling
FHA plans to incentivize housing counseling are part of the agency's range of initiatives, including the “Blueprint for Access” pilot program, to expand access to FHA loans for millions of homeowners with “bruised” credit. Borrowers who complete …
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Question by Christine: Mortgage Eligibility?
I have 8K in credit card debt, sales but that is my only debt. No car payments, student loans, etc. I have about 3K in my savings. Is there a good chance I could be preapproved for a mortgage? I’m really just trying to get the ball rolling on the home purchase process. My credit card debt will be paid off within the next 6 months thanks to a new higher paying job. Looking for a yes or no answer and would like to avoid the “you should pay off your credit cards before you apply”
thanks for all the responses!
Best answer:
Answer by Marita
It is not so much how much you owe in dollars, then the ratio of your debt and your income.
The things the mortgage companies will look at: How much disposable income do you have left, after you pay your monthly debt. Also, they don’t like to have your monthly mortgage payments anymore than 30 percent of your income. So, they will qualify your for an amount they think you can afford. And of course, your credit score is important. Have you made your payments on time etc. You can check your own credit report for free once a year (not the kind they advertise on TV, where they suck you in for a subscription). This one is government approved and everyone can do that.
Here is the link: https://www.annualcreditreport.com/cra/index.jsp
Add your own answer in the comments!
That isn’t much debt, I would not worry about it. If your credit rating is good and you have enough income you will qualify, but you need more in savings. 3k won’t even cover closing costs, and you need a down payment.
Nobody can answer this for you without knowing how much income you have, and how much the minimum payments on those credit cards each month are.
Your income is going to be the biggest determining factor in this. Basically a lender is going to want you to have no more than 41% of your income going to debt payments, including the new mortgage. So, if you take the monthly mortgage payment you want to make (including principal, interest, taxes, and insurance), add your minimum monthly credit card payments, and that number is less than 41% of your monthly income, you should be fine. That’s also assuming that your credit score is at least a 620 (minimum needed to qualify for an FHA loan).
Just for the record, the lender is not going to care when the credit card will be paid off. They are going to count the minimum payments in your debt-to-income ratio until it’s paid off. So if the CC debt throws your debt-to-income ratio too high to be qualified, wait until it’s paid off and then try again.
Also, you may need to save some more money for a down payment. FHA requires at least 3.5% down, so with only $ 3000 down payment, that would be a sales price of $ 85714. Your lender will probably let you roll closing costs into the loan but make sure you ask first. If you do this then your actual sales price would probably have to be more around $ 80K depending on what closing costs in your area average. You can also look in your city, county, and state to see if they have any down payment/closing cost assistance programs.