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My father is looking to buy a house soon. He saw a home that was just placed on the market about two weeks ago outside of Pittsburgh and it's priced at around $137,000. Monthly, I believe the mortgage would be around $850 including property taxes. He wants to take out a VA loan for about the same amount of the cost of the home. He has since retired from his job of 16 years and is receiving about $2,000/month in retirement income. He was recently hired at another job about a month ago though and his income at that place is around $1,350/month. Combined, that would be around $3,350/month, which would be about $40,200/year in annual income that he's receiving.
Currently, he pays rent on the townhouse which we live in, around $650/month. The debt that he owes (not including utilities) is around $1,400 encompassing five bills. These amounts range from $130-377. Four of these bills are derogatory though, which has been the case for about three years now. Credit scores are 583 (Experian), 620 (Equifax) and 651 (TransUnion), the middle (Equifax) score happens to be the FICO score which was from myFico.com, not too sure on the other ones though.
He plans to use my brother as a co-borrower who's getting $714/month through disability ($8,568/year), although he has no credit at all. Combined, my dad and brother's incomes would add up to around $4,064/month.
With the aformentioned expenses to be paid off within the next few months (hopefully) and relatively good income, what are the chances that he'll be eligible for a loan?
Last edited by neurodistortion; 09-01-2011 at 11:32 PM..
Its close as to whether he would qualify. Lender to lender the guidelines can differ, but the lenders i work with require a minimum 620 FICO on VA loans, so his FICO is high enough.
With the numbers you provided, looks like total payments would be $1400 + $850= $2250. The monthly income would actually be a little higher that what you think. The disability income is not taxed, so lenders will gross that up 20% to 25%. So the income from the brother would be closer to $850 per month which added to fathers income of $3350 makes total income $4200. This would make the debt ratio(2250/4200) 53%. I have seen many VA/FHA loans approved with that debt ratio even though it is rather high.
There is a chance he would qualify, but it isnt a done deal.
Its close as to whether he would qualify. Lender to lender the guidelines can differ, but the lenders i work with require a minimum 620 FICO on VA loans, so his FICO is high enough.
With the numbers you provided, looks like total payments would be $1400 + $850= $2250. The monthly income would actually be a little higher that what you think. The disability income is not taxed, so lenders will gross that up 20% to 25%. So the income from the brother would be closer to $850 per month which added to fathers income of $3350 makes total income $4200. This would make the debt ratio(2250/4200) 53%. I have seen many VA/FHA loans approved with that debt ratio even though it is rather high.
There is a chance he would qualify, but it isnt a done deal.
The $1400 debt would be temporary, I believe if he does get the house that he will pay that off prior to obtaining the mortgage... that would certainly lower the debt ratio I think. I forgot about my brother's disability not being taxed, but anything to make the debt ratio lower is good news.
Its close as to whether he would qualify. Lender to lender the guidelines can differ, but the lenders i work with require a minimum 620 FICO on VA loans, so his FICO is high enough.
This would make the debt ratio(2250/4200) 53%. I have seen many VA/FHA loans approved with that debt ratio even though it is rather high.
There is a chance he would qualify, but it isnt a done deal.
My score was different for all 3 credit agencies.
My high score was over 620 and my low was around 593.
I went to over 8 lenders. They may have had different guidelines, but I was denied for the same reason at all of them. Debt to income ratio.
I had assets 5 times the amount of the loan. Did not matter worth a hoot.
All of this was in late 2009 and early 2010, so maybe the rules and the "flexibility" has changed.
I could not get past the debt to income ratio, though I had never been late or missed a payment on anything, EVER.
We bordered around that 52%-53%-54% debt to income ratio, for all of them.
If your Father can get his under 52% he should sneak in the door.
My score was different for all 3 credit agencies.
My high score was over 620 and my low was around 593.
Generally speaking, everyone's scores are different for each of the three credit agencies. Typically, the mortgage company will take the middle score. But I have known some, lately, that use the lowest score.
To the OP - your father's new job income will not be considered in qualifying him until he has been working there for 1 full year - with certain exceptions for job changes within the same field, with a minimal gap in between employers.
So my dad toured the house this afternoon and talked with the agent, then gave some info on his income and such to the mortgage representative at PNC, they must've talked for a while but they told him that his score was exactly at 620 which means he might just step in the door so to speak, they're still sorting out all the paperwork though and hopefully he should get a call back tomorrow.
Well he got preapproved for the loan but because of mutual differences in our family, we had to cancel our offer unfortunately.
Sorry it didn't work out - but for future information or for anyone else who reads this thread later: Being preapproved is a looooooong way from getting the loan.
Well he got preapproved for the loan but because of mutual differences in our family, we had to cancel our offer unfortunately.
feel sad for him...
(I would pay off that $1400 debt before applying for mortgage, though - to lower debt-to-income ratios)
And yes, pre-approval is quite aways from the actual approval and financing. Gives hopes, though, sometimes necessary to go on...
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