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Am I mortgage material?

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Posted (edited)

Hi, all.  I'd like some input on

 

1) Whether I'd qualify for a mortgage

2) If not, how much more I have to do

3) If yes, what kind of loan and what kind of lender should I look into

 

Income:  

 

~$70k a year at current job, but have only been here 4 months, and I've had 4 employers in 4 years.  Higher salaries, but same title.  Common in my industry, but I know it doesn't look good.

 

Price range:

 

I'm looking for something in the $100-130k price range.  I would only want to go bigger than that for a house that had strong potential for renting out part of it. (I'm in a college town in rural central PA, lots of carriage house apartments here). 

 

Credit/downpayment:

 

Credit Karma scores are 635-648.  One 30 day late, history is not long (7 years) and CC utilization is at 24% (19k/80k)  On the good side I do expect that by the end of March, which is when I hope to be applying, I will have that utilization down to ~14%  AND have money saved up for a 3.5% downpayment.

 

Debt: 

 

This is my big problem: I have $150k in student loan debts  (professional education in an occupation that I am currently unable to pursue).   It’s all in deferral now (Covid) but obviously payments will resume at some point.   Car loan of $5k.  

 

I am in a USDA loan eligible area.  I jointly owned a house before, with my ex.  I heard if it’s just me now, I qualify as first-time buyer (?). 

 

 

Thanks for any help!

Edited by Dennsman
clarity

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Posted (edited)

Thanks, Marv!

 

 

I should add -- I know that ultimately I just need to apply and see if I prequalify, but I'm asking now because I'm trying to decide what I should do about my current rental situation, which is not ideal. 

 

If I get the sense I will qualify soon, I'm going to suck it up and look to buy a house this spring/summer.  If it sounds like I'm a year away from it (need lower CC further, bigger downpayment, etc), I'll go ahead and sign a year lease on a different apartment.  

Edited by Dennsman

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21 hours ago, Dennsman said:

Credit Karma scores are 635-648.

These are absolutely meaningless.

 

You need to know your mortgage FICOs.  Here's a thread:

 

You are already carrying a lot of debt relative to your income.  

 

What would your DTI be with a $125k 30-year loan (make sure you include property taxes, HO insurance and HOA, if any, along with your other monthly debt obligations; there are formulas to synthesize student loan payments when those debts are in deferral).

 

21 hours ago, Dennsman said:

3.5% downpayment

Assuming your credit and DTI are in order, I'd be really cautious about getting a mortgage with so little down (unless you have a giant pot of money for emergency savings that you didn't mention).

 

3.5% may not even cover your closing costs, and if they "roll them into your loan" you may owe more than the house is worth the day you move in.  In the event of an urgent financial need you wouldn't be able to even pay off the loan by selling the house (after considering selling costs like real estate commissions, title insurance for the buyer, etc.).

 

In short, please be very cautious.  Even if your credit and DTI fit within the rather generous guidelines of some loan programs, just because something is possible doesn't make it advisable.

 

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