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With a credit score around 580 range can we get a mortgage for a $400k house?

Our annual income is over $85k now, but due to new position, annual income in the next 6 -12 months will be over $160K.  We are renting now.  Should we wait to attempt to get a mortgage via NACA or traditional lender now or wait a year?  We only have car loans.  Debt to income ratio is favorable. Target home price is about $400k. 

Q2: Would it be better to buy a small ~$200 townhouse now and then buy the larger home that we really want in like 3-4 years?
  • December 27 2013 - Orlando
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Answers (8)

That credit score is right around the minimum border that lenders like myself will allow. A credit score of 580 is the lowest most lenders can go. So hopefully you are at least above that range. If this is true, then you should have a better chance at obtaining a loan. Otherwise, I recommend that you spend some time fixing your credit scores. The simplest ways to fix your scores is to pay off your debt and revolving credit balance on time. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing with your situation. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. There would only be a few more details needed to sort out your situation. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • January 03 2014
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You could do a $400K purchase assuming the county you want to buy in supports an FHA/VA loan of that size. To go conventional you will need a 620 score or better with 5% down. A $400,000 loan at 4.5% over 30 years is $2026/month without adding MI, taxes or insurance and $80K/year is only $6,666/month so you are almost already at your max DTI with just the principal and interest. My best guess would be to buy the $200K condo at this point.
  • December 31 2013
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Hello


If you are looking for a home around $400,000 you are going to need a credit score of 620 or better and 10% down (you can go to 5% down if your crdit score is 660 or better) Conventional Loan.

if you want to put less down then you need to go FHA (with 3.5% down) but then the FHA limits are being lowered for the Orlando area in 2014 

So it is not just your credit score but your down payment that wil determine what you qualify for
pls call me for further details and see if we can create a game plan for you that makes sense and takes into account the coming changes

Tom Bawany
Mortgage Loan Specialist
REMN, Inc
NMLS # 519971

  
  • December 30 2013
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@Al:  thumbs up to you!   It is so nice to see a professional looking at the big picture rather than "of course you can buy today".

  • December 27 2013
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I agree with Wetdawgs on your scenario.  It may be better to come up with a short term gameplan to figure out your next step(maybe a year out but no longer than two years) to get your scores increased however if you do want to move forward now you can submit your information to the Zillow Marketplace to see who can help you with your request so you can see what it is needed to become eligible for a loan now versus waiting.  

Kind Regards,

Al Norman 
PRMI Branch Manager - Orlando/Casselberry, FL
  • December 27 2013
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Yes this can be done but we must look at the complete picture. The amount of your down payment will also be a factor. I would love to answer any additional questions and help you.
  • December 27 2013
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I would put together a plan to raise your credit scores over the next year as well as saving up a good down payment.  Then, purchase the home you really want.

Purchasing for a 3 to 4 year time frame tends to be a great way to lose money.    Rent for a year or two rather than adding an expensive intermediate step.   (Buying and selling is also very time consuming).
  • December 27 2013
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I would purchase the $200K townhouse and then upgrade within 3 to 4 years. Buy increasing your credit score you will also receive favorable terms on a higher loan amount. With a score of 580 you can qualify for an FHA loan. How much were you looking to place down on your home?
  • December 27 2013
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