New Mortgage - First time home buyer

[TifffanyD]

I may be confusing this loan with another, but I'm pretty sure we were turned down for an FHA loan through our credit union because our salaries were too high (and they really aren't that high, lol). Do FHAs generally have salary requirements? That might be something to consider...

To pp, we just bought a house in late July in Orlando. We put 10% down and were able to get a loan no problem through our credit union, but we both have good credit. I would check both your and your husband's credit now if you want to buy a house in the fall. That way if there's anything wrong or needs to be fixed, you have time to work on it. You can get a free credit report (have to pay like $8 for the score itself, I believe) from annualcreditreport.com (this is the government site; most of the other sites are just trying to convince you to sign up for credit monitoring services) from each of the 3 major credit bureaus once per year. Hope that helps!

Thanks for relaying your experience with homebuying and FHA. Having a salary cap is something interesting to look out for - I figured if it was so great everyone would be getting one. There has to be something restricting it

 

[asmit4]

There are SOOO many misconceptions about FHA loans.
1. FHA loans are not just for low income people. ANY income can work- you can make 250K a year and MORE and still qualify.
2. FHA loans are not just for people with little or no $$ down. SURE- 3% is all that's required but they can do an FHA loan with 80% or more down if you wanted to.
3. FHA loans are not higher interest. In fact-most of the time they are either on par with conventional loans or even 1/4% less.

I truly believe the reason people don't do them is b/c they have these misconceptions- people hear and think things like "FHA is for poor people", they think FHA and think 'government help' for those who can't stand on their own.

FHA loans are WONDERFUL for most people. They allow you to only put 3% down (you can do more if you want), they can approve you quickly-HSBC approved me and my husband over the phone in 10 minutes. All I had to do was prove via paper documents that what I said over the phone was true (income, $$$ in bank accounts) and we were qualified. I also don't mean that HSBC 'prequalified' us- I mean that they approved our loan.

With FHA loans you can refinance very easily- and quickly- as stated by some above. With FHA loans you also can get loans for building and making changes with no equity in your house. As an example- you have an FHA loan. You have only 5% equity but you REALLY want a new kitchen. You head to the bank and show them your plans for the kitchen. They reconfigure your loan by allowing you to use the AFTER repairs/upgrades as your NEW house value. Thereby giving you the equity in the house to build the kitchen.

I am such an avid customer when it comes to FHA and all I am is a client. I'm not a banker. They have really done right by me, several of my friends and my parents. My parents were THRILLED when I helped them refinance their loan into an FHA loan. Their interest rate went down and they were able to significantly lower their payments from like 10% to 6% about a year ago. They were shocked when they realized that even a couple with a 6 figure income can qualify.

I HIGHLY recommend that ALL those who are struggling with their payments, want lower interest rates or simply want to do a cash out refinance, or just want to buy a home to consider FHA. I think many will be surprised at just how great the program is.

 

[lastminutemom]

Is there anything "wrong" with FHA loans? I mean, if they don't use credit do they have higher interest rates or something?

I am looking at buying a house this fall. We recently relocated to FL and my relocation assistance on buying a house runs for a year, so if I do it then I can use my company's zero closing cost program. Also, house prices have come down a LOT here recently, to the point where if I wait and sock away more money any additional savings (and then some) may be eaten up by housing price increases.

Anyways, moral of the story, I know that I have good credit. Above 760, not sure how much above. My DH and I just got married, he didn't have much credit before but has an auto loan now. We currently rent an apartment.

I think we will have about 10-15% to put down by fall (but would rather not completely empty out savings just in case). So 10% to be safe. Would an FHA loan still be a good idea? Just getting an idea of what I should start researching. Only looking for around 150k if possible (homeowners insurance and property taxes are high here so would rather keep the mortgage a bit lower)

Any thoughts are much appreciated!

Prices in FL will most likely continue to drop for a while. Inventory is very high. If you are uncertain that you will be there for several years, be leary of buying as once the market improves it may take a few more years for homes to appreciate.

 

[purplegirl247]

I just checked our paperwork and it looks like FHA loan income restrictions are different from county to county (or maybe state to state?). Our loan officer said that a 2-person household in Orange County, FL could not make more than $75k to qualify. I think it's awesome that your parents or whomever you knew with a 6-figure income were able to get one, but I don't think everyone would...

 

[asmit4]

I just checked our paperwork and it looks like FHA loan income restrictions are different from county to county (or maybe state to state?). Our loan officer said that a 2-person household in Orange County, FL could not make more than $75k to qualify. I think it's awesome that your parents or whomever you knew with a 6-figure income were able to get one, but I don't think everyone would...

I am sorry but you must be mistaken. I know without a doubt- for fact that there are absolutely NO income restrictions in the entire states of IL,OH or NY. I think I can safely assume that FHA rules are the same in the other 47 states.

You must be looking at a specific TYPE of FHA loan. The standard FHA loans do not have income limits.

 

[purplegirl247]

Could be because we went through our credit union. Maybe they have different restrictions with their FHA loans.

 

[crisi]

I am sorry but you must be mistaken. I know without a doubt- for fact that there are absolutely NO income restrictions in the entire states of IL,OH or NY. I think I can safely assume that FHA rules are the same in the other 47 states.

You must be looking at a specific TYPE of FHA loan. The standard FHA loans do not have income limits.

They do have maximum mortgage amounts that vary by state/county however. So your income won't nix it - but the mortgage required to buy the house might.

 

[mrsklamc]

I am confused. A pp said that they helped their parents refi to FHA, and I thought you had to be a first time homebuyer?

Also, do FHA loans have PMI insurance?

 

[HayGan]

I suggest you consider an FHA loan. FHA loans are NOT credit score driven and unless you have recent derogatory information on your credit report or don't qualify because of a debt ratio issue, it's one of the best options out there right now. After Jan 1, the required down payment is 3.5% of the purchase price. The seller can contribute towards closing costs.

Call your bank and they can help you. If you are a veteran, you may qualify for a VA loan (100% financing/ no PMI) and there's also USDA Rural Housing money for 100% financing.

Good luck...it IS a great time for first time homebuyers!

OP - FHA is probably the only way for you to go. One thing that I thought was different with FHA than what kathie859 posted is that I thought you had to have a median FICO of 620 or higher to qualify. FHA does not have income limiting guidelines. It is a great program and the only way that many people can qualify for mortgages these days.

 

[HayGan]

You're a financial analyst in charge of fixed assets and you have bad credit? I don't mean to be snarky here, but aren't people who work around and with money supposed to be good with it?

That really wasn't necessay and you did mean to be snarky. The OP was looking for advice on mortgages not criticism. You do not know the circumstances behind their credit rating and they certainly do not have to reveal it here. There are many things that can contribute negatively to a person's credit rating that may have been beyond their control. Sure many people have really screwed up their credit rating by acting irresponsibly but not everyone.

 

[kathie859]

I am confused. A pp said that they helped their parents refi to FHA, and I thought you had to be a first time homebuyer?

Also, do FHA loans have PMI insurance?

FHA is to purchase an owner-occupied property--not just for 1st time homebuyers; however, you can only have one FHA loan at a time.

FHA loans have MIP (Monthly Insurance Premium). One of the closing costs is the Upfront Mortgage Insurance Premium which can be included in the mortgage amount OR paid at closing. Contrary to what another poster claimed, all closing costs cannot be rolled into an FHA mortgage. Sometimes a lender will offer "Premium Pricing" which means the buyer pays a higher rate but the lender pays points back that go towards closing costs. Also, I'd say 9 out of 10 purchase contracts that I handle have the seller contributing to the closing costs.

One more comment about the credit score question. The FHA program is NOT credit score driven; however, some lenders choose to set a minimum credit score for their applicants.

And lastly, to the poster who has 10-15% down and good credit, you'll want to talk to your banker about FHA vs a conforming loan AND if buying out PMI on a conforming loan makes sense in your particular case. It might make more sense to plan on 10% down on a conforming loan, buyout the PMI and pay closing costs and prepaids (i.e., 1st year's homeowners insurance premium) with the rest of your money.

 

[Kickapoo Joie Juice]

That really wasn't necessay and you did mean to be snarky. The OP was looking for advice on mortgages not criticism. You do not know the circumstances behind their credit rating and they certainly do not have to reveal it here. There are many things that can contribute negatively to a person's credit rating that may have been beyond their control. Sure many people have really screwed up their credit rating by acting irresponsibly but not everyone.

No, I am honestly surprised that a "Financial Analyst" would have bad credit.

Less surprised that they don't know anything about mortgages since mortgages have become so impossibly confusing.

My MIL, who is a retired nurse, said it's the same thing with nurses-she said every time she saw a nurse smoking or grossly overweight, or both, she was like, you're a NURSE!

FWIW, with every home we've purchased, the stack of papers that comes along with the mortgage has become larger, and larger, and larger. And it's not like we're getting different loans, either, just your basic 15 or 30 year fixed. In the past 20 years choosing mortgages and understanding all the paperwork has become terribly confusing.

 

[sussanfrank]

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Sussan Frank

 

[smokeyblue]

As someone who was just turned down for a USDA loan with a high 600 score my advice to you is to pull your credit report. If you have anything and I mean anything on it call right away and pay the debt or set up a payment plan and pay on it for a few months before you even attempt to get a mortgage.

I had a home in mind, the payment/insurance/taxes would have only be 65% of what I pay in rent now. It didn't matter that the home was totally affordable to me, all that they cared about was $210 I owe to my college and a $186 medical bill.

I was told I couldn't reapply until I paid these debts, got credit counseling and waited 6 months! If I would have know of, and paid these debts I woudn't have had a problem (they weren't on my report in July this year but showed up this month). I mean a lousy $396!!! They could have cared less that I have a 12 year rental history with no late payments or that I've worked at the same place for 9 years.

 

[minnie1928]

This is a 2 year old thread, I'm sure the OP has done something by now.

 

[WheelCEO]

FHA... for sure! It's the best way to get a mortgage with a low credit score. Plus you only need 3% down and you can roll closing costs into the mortgage.

bad information here. Typical closing costs on fha are 3-3.5% down.. however you CANNOT roll closing costs into your mortgage. You CAN ask the seller to contribute towards your closing costs but that has become near impossible with all of the REO properties on the market today

OP, I've sold countless properties to first time buyers with low-mid 600 credit scores.. my most recent secured a fixed 30 yr 4.75% with 0 points. Find a GOOD mortgage person and don't jump on the first deal!

 

[DumboPrincess]

Disclaimer--I didn't read all the way through the thread. I posted almost the same thing not so long ago, and you will get varied responses.

The best advice I got was to not try to get approved through a big/national lender, but go with a local bank/small mortgage company. The national lenders have people chomping at the bit wanting a loan, and can take a broad view and be very, very picky in their lending. The local or individually owned mortgage companies/banks will get to know YOU, and make a decision based on your personal situation, instead of a generalisation.

We were able to approved this way, and I'm sure you can, too! Shop around--not all mortages are created equal, and if you comparison shop not just types of loans, but also lenders themselves, I'm sure you'll end up with a mortgage that will allow you to purchase that home! Good luck!

 

[Liberty Belle]

Do you both have at least 620 scores? If so, you could get an FHA loan. I would recommend checking into it ASAP.

If not, go to creditboards.com and learn how to raise your scores. You can do it very quickly.

If you're above 620, though, I see no reason to wait, if you can go the FHA route (if the mortgage you want is low enough - and the ceiling is actually pretty high).

 

[Liberty Belle]

So, does this mean without a ton of money down, we are going to have a very hard time getting a mortgage at all?

No, not necessarily. If you get an FHA loan, I think it's only 3% that you have to put down. You'd get a very good rate, too.

 

[Liberty Belle]

Well hell - didn't realize the thread was two years old. I hate it when people do that.

Oh, well, still good advice, if someone else needs it.