Q: What about credit scores?
A: Credit scores are a very crucial component. You will need a minimum of a 620 to qualify for most programs. If your score is less than 620 then we can get you on a path to get your score raised. FHA allows for 580 credit scores with compensating factors.
Q: What does it take to buy a house with 0 to ½% down?
A: If you are a Veteran and eligible for VA financing then you could qualify for a 0% - Down loan. If you are not a Veteran then you could qualify for just 1/2% total out of pocket provided your credit score is over 680. This program is also subject to income limits.
Q: Debt to income ratios and how they work
A: Your mortgage payment is calculated vs. you monthly income (gross for W-2’d borrowers, net for self-employed) to come up with a percentage. Then your consumer debt is added to the mortgage payment, to come up with your “back end” ratio percentage. The optimal DTI is 35/42 but with compensating factors certain programs allow DTI above 50%!
Q: Collections and judgements?
A: Not all Collections and judgements need to be paid to qualify for a loan. Medical collections, for instance aren’t considered “debt” by FHA. Although them being present on your report can impact the scores. It is best to get a professional opinion from a loan officer before paying off collections or judgements, to make sure that A) you have to & B) you are timing it correctly with regards to your financing.
Sometimes larger collections can be kept on the credit report, if you have established and are making timely payments on a payment plan.
Q: What qualifies as a “First Time Buyer”?
A: The local Housing agencies consider you a first-time home buyer if you have not owned a home in the last 3 years. In Canyon County, and other “targeted” counties you do not have to be a first time homebuyer to take advantage of the programs available for FTHB’s
Q: Self-Employed. How does that work?
A: You will be asked to provide a full 2 years self-employment history, and the income from the NET of your taxes will be averaged over 24 months. So, if you plan to purchase a home soon, maybe consult a Home Mortgage Expert BEFORE you file your 2019 taxes. Also, get your business license on record, your lender will be looking for “3rd party” verification of your 2 years self-employment history
Q: Owing the IRS?
A: If you owe the IRS money, see if you can work out a payment plan with them. If you qualify with the monthly amount and can prove timely payments owing the IRS money is not a problem. Old outstanding judgements with the IRS may not be considered for the payment plan, and they’ve already hit your credit score – so if you owe money on your taxes, don’t procrastinate. Call the IRS right away!
Q: Defaulted Student Loans?
A: There are entities out there who will help to absolve you of defaulted student loans and put you on a repayment plan based on your income. In some instances, they also remove all the derogatory reflection on your credit report, which brings your score up dramatically. You are still “in default” on federal debt, so be sure and disclose this to your lender so they can put you on the right loan program.
ALL PROGRAMS ARE OAC and subject to varying guidelines depending on the program. We are an Equal Housing Opportunity Real Estate Company.