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I was qualified for a 200,000 FHA loan at 5.25% The problem is I need 270,000 for a purchase. Everyone say that they cant grant me 270,000 and that 200,000 was my max because of my debt to income ratio. I make about 56,000 a year. So i decided to add my fiancee as a co-borrower. Her credit scores are not great. They are 618, 587, and 589. And combined we make about 115,000 per year. I was wondering if there was anyway we could secure this loan without a high interest rate. If not, what are my options? Please Help!!
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Assuming your fiancee is living with you, it's clear that you can afford the house but cannot use her income due to her credit, correct?Yes, there is a solution. FHA allows a non-occupying co-borrower to co-sign on your purchase. This person does NOT have to say they'll live with you, but only that they'll co-sign for the purpose of helping you qualify for your purchase.I only share this option with buyers if they've shown reasons why they can afford the loan payments on their own OR if the co-signor is agreeing to help with the payments. You appear to fit that scenario since your fiancee will be helping with the loan but does not have the credit.What I would do is find a co-signor and begin shopping for a house. In the mean time, try to improve her credit so you won't need the co-signor when you actually find a place. I'm not sure if there's excise tax in NY, but WA state specifically has rules saying a homeowner does NOT have to pay tax to remove a non-occupying co-signor from title IF the sole reason the co-signor was on the title was to help the buyer qualify for a home loan. You may not even have this kind of tax in your state, so it may not apply, but if you do, it would be worth looking into. Your real estate agent should know the answer.The short answer is, YES! Get a co-signor with the income needed to help you qualify. In WA state, there's also city/state funded down payment assistance programs that would've helped someone in your scenario, so it's worth finding out if there's any programs like this in your area. In WA state, there's a down payment assistance for the city of Seattle as high as $60k! No interest and payments for 30 years, so the buyer can qualify buy a home and have a 2nd mortgage funded by the city/state where the payments of the 2nd mortgage do not affect the qualifications of their first mortgage. I definitely cannot answer if there's programs like that in NY but you should definitely look.A very experienced FHA lender who is approved to do down payment assitance programs and is familiar with them is what you should be looking for.Good luck!
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