Is There Anyone Who Can Accept My Status

ben

LoanSafe Member
Sep 15, 2014
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Hello, I would first like to say I'm new here and I don't know if this is the correct forum to ask this, but I'll give it a shot, so thank you in advance for listening to me..
Now with what I am here for; I am looking for someone who can help with obtaining a first time mortgage, but I do have a bit of a credit issue. My current scores are all mid 500's. I've improved them (believe it or not) from what they originally were but seem to be stuck. I was discharged out of bankruptcy in 2009, I have around 40k in debt (car, student loans, and some misc things) I make 50k a year, and have a solid on time payment history over the last few years since I have been really watching everything. Now there are some blemishes on my credit, and I understand that. I keep being told the scores will need to raise before anything can be done, but then I hear you can still be approved, but you will need a couple months reserve in your account... etc.. So I guess what I am really getting at here, is there any mortgage I can qualify for that will accept my lower credit scores, not horrible, but not so good credit report, low dti, good solid job history with stable income? I look forward to hearing the responses. Thanks
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
www.loansreduced.com
Hi Ben,
Welcome to the forum, you found the right place to have all your questions answered and I would be more than happy to help.

The lowest credit score that we have available is 580 for FHA, most lenders will start at 620. You're correct when you state that the lower credit score program requires reserves and also limits what you're qualified for through a lower debt-to-income ratio. I'll give you an example below:

580-619 credit score FHA program:

BORROWERS WITH A MINIMUM FICO OF 580 OR MORE WITH ONE COMPENSATING FACTOR LISTED BELOW MAY NOT EXCEED RATIOS OF 37.00% AND 47.00%:
  • 1 - 2 Unit 3 months reserves OR 3 - 4 Units with 6 months reserves (PITIA)
  • New monthly payment is not more than $100 or 5.0% higher – 12 month history required with no more than 1x30 days. Cash out does not allow for any lates.
  • Residual Income (see grid)

BORROWERS WITH A MINIMUM FICO OF 580 OR MORE THAT MEET TWO COMPENSATING FACTORS LISTED BELOW MAY NOT EXCEED 40.00%/50.00%:
  • 1 - 2 Unit 3 months reserves OR 3 - 4 Units with 6 months reserves (PITIA)
  • New monthly payment is not more than $100 or 5.0% higher – 12 month history required with no more than 1x30 days. Cash out does not allow for any lates.
  • Verified and documented significant additional income that is not considered effective income; and
  • Residual income (see grid)
FHA is more flexible one borrowers with blemishes on their credit as well. If you have a collection outstanding, instead of paying it off we would calculate a payment based on 5% of the current balance. If this sounds like it's something you would fit into please don't hesitate to reach out to us. One of the first things you should determine is if you will qualify for a new house (or the house you're looking for) with the current obligations you have.
 

ben

LoanSafe Member
Sep 15, 2014
2
1
1
35
Okay here is the scenario now... I myself don't quite have the credit score requirements to obtain a mortgage.. I do however have the income. My fiancee' on the other hand has recently been approved from quicken loans with her scores, but her income disqualifies her because she doesn't have a "verifiable" type of income. She is a cosmetologist, therefore she is classified as self employed. She doesn't get a paycheck, but she is paid by clients as they come in. She is fairly new to the business and hasn't made really enough to file any type of taxes yet, so retrieving returns for last year isn't an option. She did have tax returns from a salon that paid hourly 2 years ago, but not for last year or this year (on her own now).

So here is my question: Is she able to obtain a mortgage even though her income cannot be verified right now through the conventional ways? Would she be able to have a co-signer or non occupant co-borrower that does have verifiable income? if so where would we look and how would we go about doing this? I know it doesn't matter since I won't be on the loan, but I will be contributing to the payments with my income since I will be living there also.(for what it's worth I make 50k annually) We live in Ohio so if anyone can provide insight on who to contact to get her a mortgage, or steps to take to obtain one that would be greatly appreciated. Thanks
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Ben,
A short answer to your question is No, she will not be able to obtain a mortgage unless she has 2 years history (on tax returns) of self employed income.

Yes she can have a co-borrower that can help with debt-to-income but their credit will be taken into consideration. The lowest credit score of the two borrowers (middle score of the lower borrower) will be used for qualifying purposes. We do have programs available that start at 580 FICO, i'm not sure how low your credit is but there may be options there.