Home buying advice please. (Howe: mortgage, bad credit, student loans)

[Shes2010]

This will be my first time purchasing a home, so I really don't have much knowledge regarding the whole process.

First off, my credit score is in the high 700s. My only debt is my car ($317/mo) and it will be paid off this December. I have zero debt on my credit cards, no student loans, etc. I'm pretty certain I would be approved for a mortgage loan. However, I only make 49K/year.

Now, my significant other's credit score is in the low 600s and has a few collector hits on his report. The only debt he has is a small personal loan, which we will have paid off in two months, and his car that still has 3.5 years left of payments. He also makes almost twice as much as I do.

We would like to get a pretty decent newer home, if possible.

So, my question is, should I just go ahead and get approved for a loan? - which will probably only be around $125,000 (it's doable), but we would like to get a house somewhere around $150,000-175,000. Will both of us applying for a loan be affected due to my SO's bad credit? Such as not getting approved? or the loan amount would be low and interest rate high?

Any tips or advice would be greatly appreciated! Thanks!

[earlyretirement]

You probably will get a better idea in this other forum.

Good luck.

Mortgage Loans - FICO® Forums

[getmeoutofhere]

His credit isn't bad, it's just not great. Your credit should offset it.

[nsumner]

If his credit is at least 620, you should still qualify for an FHA loan that requires only 3.5% down. My suggestion is to speak to a reputable loan officer and get pre-approved. If there is any repair that needs to be done to bring it up, you can work on that, but at least you'll know where you stand.

Congrats for having such a low debt ratio.

Naima

[Shes2010]

Thank you for all your replies. Getting opinions/advice always helps!

[FalconheadWest]

You need 580 for FHA's 3.5% so if it's low 600's you should be fine. The thing that would stop it is the collections. How old are they? FHA likes to see at least 12 months perfect credit, so if they are recent collections, good luck. If they are old and he's established new credit since, you should be fine. Talk with a lender.

[nsumner]

FHA's guidelines are constantly changing and recently (within the past 2 weeks) they have changed the minimum FICO score to 580 for 3.5% and if your score is lower, then they require a minimum of 10%. They haven't announced yet when this changee will take effect.

However, the MIP will be increasing for loans originated after April 5, 2010 and the talk among the mortgage community is that the new FICO score requirements may take effect then as well.

Naima

[Rakin]

Tips and advice....

Find a good buyers agent who can guide you through the entire process. Someone with years of experience can help you make the right decisions and avoid mistakes. The way RE works is that it also will not cost you any money.

Find 3 good agents to interview and see who will work for your best interest and not just sell you a home.