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My husband and I both have credit scores of 620, and bring in about $ 30,000- 35,000 a year. We’re looking to buy a home below $ 100,000 in the Houston/ Conroe, Tx area. Ive been told by a local mortgage company that we look pre-qualified. The only downside is my husbands only been with his current employer for 8 months, and im going to school and not working. How likely is it we could get a decent interest rate or even get a mortgage at all?
As far as debt goes we have one credit card with $ 800 on it, I have $ 9000 in deferred student loans and im not expected to start paying them back till late next year, we have one collection for $ 1400 that we’re disputing. All other debts were paid off or settled. I was told the student loans wouldnt be held against us.

5 Thoughts on how likely is it that we will qualify for a mortgage?
  1. Reply
    65% water
    December 16, 2012 at 12:10 pm

    I don’t know what it means that you “look pre-qualified.” I think you’ll have to have a more in-depth discussion with a reputable mortgage broker. If you have a decent relationship with your bank you could start there.

  2. Reply
    December 16, 2012 at 12:37 pm

    Used to be that all you needed was a credit score of at least 620 to get a conventional loan. Now due to this mortgage crisis, more lenders are looking at credit score AND debt to income ratio. How much debt to you have? Sorry, but your income may not qualify you for a $ 100K home if your debt is too high.

  3. Reply
    December 16, 2012 at 12:53 pm

    620 isn’t a very good score. It’s where “poor” starts.

    Add up all your consumer debt monthly minimum payments, including the new mortgage (here’s a nice calculator to find out what your new payment would be…

    …don’t forget to add in taxes, insurance and mortgage insurance…taxes should be on the listing sheet, and you’ll have to get the insurance from an agent and the mortgage insurance from the lender who thinks you look “pre-qualified”) and divide that figure by your monthly gross income. This will give you your debt-to-income ratio. If it’s over 40% it’s not likely you’ll be approved for any decent rate. If your dti is 40%, it means that for every dollar you earn, 40 cents goes to consumer debt. The other 60 cents has to pay for everything else…food, utilities, insurance, student loans, clothes, medical, dental, gas (ouch!), auto repairs, prescriptions, hair cuts, manicures, dinner and a movie…everything. Don’t forget to budget for savings. Start now, so when you’re 58 years old you won’t have to wonder if you’ll ever be able to retire.

    Do not get an ARM. Wait until you save some money and improve your credit score.

    Do not get anything fancy, like a interest only loan or a stated income or no income/no assets loan. These are good products for a specific market, but you’re not in that market.

    ONLY get a plain old fixed rate loan for 30 years or more if available.

    There’s no harm trying, except that each time a lender pulls your credit reports the score declines, and you may have to pay non-refundable or partially refundable application fees . Try the bank where you already have a good relationship. They may be able to cut you some slack. As for your husband’s job, most lenders want to know what you’ve been doing for the last 2 years. Did he just graduate? That might be ok, depending on what his job is now. Did he get an employment contract or letter stating his salary and such? The lender is going to want that probably. Every lender is different.

  4. Reply
    December 16, 2012 at 1:33 pm

    I hate to say this…. but it doesn’t look good…. Debt to income ratios are important. If you guys don’t have many bills– you may be alright. 720 right now is what most lenders are looking for. They are looking at job historys- my lending company likes to see 2 years in the same field. Your housing should not take up more than 28% of your income. What you should do is talk to a lending company and find out what your options really are. There is no point in looking if you wont be able to qualify. If it turns out that you don’t, ask them what you should work on to better your chances in the future…. sometimes it’ll just take 6 months to better your chances. Don’t give up!

  5. Reply
    December 16, 2012 at 2:05 pm

    In this housing market the only people getting loans are those with a 20% down payment. You credit score I think may be to low but the min. requirement is in the low 600 so check on line. is a good place to start. The down payment part is a huge part of getting financing. Good luck.

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