Let’s be honest, in our digital and electronic world there is no excuse for you not to be fully informed about any of the decisions you make, but let’s face it, there is still room for surprises along the way. One of the big surprises that you can run into is when you are looking to purchase your home with a spouse or co-borrower and you soon realize that your co-borrower has poor to fair credit. Upon finding this out you mind immediately begins to question how you can Purchase Home With Poor Credit Co Borrower. This is not the end of the line by any mean, and yes, it would have been helpful if you knew this information before applying, but so is life I guess. The best thing you can do is read through the following paragraphs and see what options you actually have so that you can make your home purchase a reality. If you are ever in need of advice or would like to develop a plan to become a home owner, then you need to give us a call ASAP at 888-900-1020 and we will go over your goals accordingly.
When looking to Purchase Home With Poor Credit Co Borrower you can start by evaluating if you really do need the co-borrower’s income in order to purchase the home that is in your sights. These days, it is very common for a household to have all members working because the days of single-income households are few and far between. The likely answer to this question is you are going to need the co-borrower from an income standpoint in order to even be remotely close to qualifying for the desired purchase price. You can use one of the affordability calculators out there to see what can be purchased given your income, but you might be surprised at how low the amount will be. Let’s take a $300,000 home you are wanting to purchase, you will need at least $80,000 in annual gross income for you to afford this home with minimal other monthly debts. Now let’s you only make $50,000 gross annually, this significantly drops your affordability from $300,000 to $180,000. If you are living in an area where that lesser mortgage amount can’t purchase the home you desire then you will be forced to use a co-borrower for your home purchasing needs. If you feel that you can purchase a home with just your income, then you should do so because the challenges the poor credit can bring will not be worth the hassle. Plus, you can still have the co-borrower on the title of the home but not on the application or mortgage. You can also use funds for a down payment from joint accounts as long as your partner writes a letter of explanation or LOX that states you have 100% access to these funds. The one catch is if you are wanting to use funds from an account you are not listed on, this will not be allowed when you try to Purchase Home With Poor Credit Co Borrower.
When thinking about loan programs that are out there and for people who might have challenged credit and/or minimal down payments, then FHA Loans are the perfect programs for you. If you aren’t a veteran qualifying for a VA Loan, then FHA Loans are your best bet to find some of the best guidelines out there. In order to qualify for a 3.5% down payment mortgage with FHA, all you are going to need is a 580 FICO score. Now if you fall between a 580 and 620 FICO score, you are going to be limited with your debt-to-income ratio at 43%. However, if you are at 620 FICO or higher then you are allowed a debt-to-income ratio of 56.9%. This is why my advice for borrowers who come to me that are close to 620 FICO, I always suggest that they hold out and see if they can get their FICO to 620 so that they can increase their buying power per the FHA Guidelines that are in place.
If for some reason you aren’t able to qualify for an FHA Loan and there aren’t any other options for you, you can always try to obtain a sub-prime mortgage. You can get one of these loans from a select few lenders who may lend down to a 500 FICO but you will be required to put down at least 15-20% as well as pay an interest rate that will be significantly higher than standard loan programs. These days you may be required to pay a minimum of 7-8% on your mortgage if not higher. These loans are catered to a risky borrower and you will pay for a lender to take on such a high risk of default. If presented with this scenario then you may need to reevaluate your need to purchase a home and maybe renting a home would be best for you. I never want to suggest my borrowers go into loans like these unless they have no other options and are insistent on purchasing a home.
If you really need your partner or co-borrower on your loan then the other option you have for them is to repair their credit so that it is at an acceptable level for your desired loan program. There are many different ways you can go about increasing your credit scores and the first thing you need to do is ensure everything on your credit report is accurate. After you have checked over the accuracy of your credit report, it may be wise to become an authorized user with someone who shares the same last name and address as you. If this person has perfect credit, your credit profile will reflect their history once you are connected to their account. Another way to boost your scores is by obtaining secure credit cards with at least a $500 balance each. If you are able to get up to 3 of these, each one can increase your FICO score 10-20 points. In a few short months you can possibly see your score jump 30-60 points depending on where your FICO starting point is.
As you can see, there are options out there for you to Purchase Home With Poor Credit Co Borrower. You deal will not be dead, but you may need to show some patience as you wait for your co-borrower to get their credit history and profile in proper order to purchase a home. If you aren’t sure of the options for you, then you need to give us a call today at 888-900-1020 and we can work on getting you in your home today!