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Profile picture for giltxl

What are our chances of buying a house if any?

We tried to start the home-buying process about 6 months ago and at that time we were told that our credit scores were too low. So, fast forward to now and currently my mid score is 650 and my wife's is 590. I again tried to start the process, supplied all my W-2's, pay stubs,etc, etc...and am now being told that my DTI was too high. My lender doesn't want to use my wife's info as a co borrower because of some credit dings that are the result of items that were ordered per divorce decree. I feel that her income would get us over that hump but not sure why he won't use it. I only make $70000 a year and so does my wife. I'm just trying to understand how my past W-2's along with my pay stubs are used to calculate ACTUAL annual income. Any help would be greatly appreciated.
  • March 23 2014 - Lytle
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Answers (7)

You should try a different lender. Each lender is different and can require different standards. Just because you get denied with one lender doesn't mean you will be denied with all lenders. There are lenders that can work with scores as low as 580. When it comes to your DTI situation, we will need more information to that problem. Either way, the best thing for you to do is to speak with a knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!
  • March 28 2014
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Profile picture for USMortgageRanger
I hate to echo sentiments as all Mortgage Bankers are not the same. For instance i do FHA with a 580 score but i do not do construction loan. So my advise is to ask question of your Loan Officer. Question like are you making the loan yourself (in that you will underwrite and service the loan) or are you looking to a third party to give you the green light to proceed with the loan. I can help you get all your question answered 
  • March 25 2014
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Profile picture for Kevin Cooter
Different lenders have different thresholds. Some will swear you can't get a loan when your FICO is less than 620.  Others have provided FHA or VA loans to borrowers with as low 580 recently. Seek the one that will consider those types of loans.  Try your local credit union too.  Many times they're a little bit more flexible if they keep their loans "in house" without shipping them off to the Fannie Mae or Freddie Mac secondary markets.  If they're planning on doing that Fannie Mae and Freddie Mac have now gone overboard on all their threats and penalties to many mortgage lenders may not guarantee loans to borrowers with less than 620. That's why you were turned down with that one lender. Just look for another.

The other thing I would suggest is really try to qualify just on your own with a good FHA (or VA loan if you're a vet).  $70,000/year isn't chopped liver and, depending on your debt load, I bet a $2,000/month payment (or less) could get you a decent home in your area, couldn't it?  Your wife's income would certainly help ensure you're able to make that payment. Then you can discuss adding your wife onto title (not onto the loan) so you're both protected on that title.

Just my 2 cents worth. Good luck!
  • March 23 2014
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We go down to 580 on FHA, VA and USDA products, but better yet I have a credit specialist who does miracles. My most current closing started with a 587 mid credit score and he ended up at 676 in less than 30 days. So in plain English, I have a plan A and a plan B and leave nothing to chance.  Please feel free to contact me direct by clicking on my profile and shooting me a message. Please don't forget to leave your contact phone number. Many times when I reply from a Zillow questions, it goes into people's spam for some reason.


Best of Luck!
  • March 23 2014
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Your chances aren't terrible, but you're really not in a good position to take on a thirty-year mortgage. 650 isn't exactly stellar credit; in your case, it appears as if you're already somewhat over-extended.

Money is the root of most marital woes, and if you already have a bunch of outstanding debt, I suggest that you pay it off, then accumulate some savings, and THEN go out and buy a house.

All the best,
  • March 23 2014
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Profile picture for wetdawgs
Two things to consider:

a)  Understand better what "credit dings" are affecting your wife's credit.  Many lenders won't lend until credit scores are > 620 to 640 so 590 is still may not be good enough.     Work to get it up.

b)  Understand what debts are counting in your debt/income ratio.    Pay down some of your debts.

  • March 23 2014
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Hello, Based on your wife's credit score, I would also suggest applying only in your name. With your current score and also assuming you want a minimal down payment you will more than likely be looking at FHA financing. The general debt to income ratio limits are around 50%. To calculate debt to income ratio: divide your full time annual income by 12 and then divide that figure by two and that will give you a debt to income limit of 50%. Add all monthly minimum payment debts to your new proposed house payment and it should be below the final figure you calculated. In your case your maximum debt to income based on a $70,000 annual salary is = $2900/mo. Your wife's income is not in lauded since she is not on the loan. Your paystubs and W2s should support one another's income. A lender will review both to be sure you have consistent and stable income. Good Luck!
  • March 23 2014
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