Dear Gina: Can Relatives With Good Credit but Fixed Incomes Help Get Me A Mortgage?
By Gina PogolMortgage Credit Problems Columnist
Anonymous asks:
Hello. I have bad credit, but want to look into purchasing a home to move my wife and I, along with her parents, into it. Her father is on a fixed income with good credit. We could go in together on the mortgage, but I must be on it also. With our two incomes together, we could do it. I have been on my job for almost 17 years. What are the chances of doing this? Thank you.
Gina says:
Hi. Thanks for writing. There are a few things we need to look at here. First, with "bad" credit, your best chance of getting financing is probably with an FHA or Rural Housing mortgage. To advise you here I would need to know exactly how "bad" your credit is.
FHA's New Minimum Credit Score Requirement?
A couple of bloggers have been running posts claiming that as of March 6, 2009, a minimum credit score of 620 is required to be eligible for FHA and VA loans. I could find no official announcement on HUD's site (or in fact any government site). I checked and apparently some banks are making that a requirement of their FHA loans, but in fact FHA is not. So you may want to check with several lenders and see if they have a minimum credit score.
The fact that your father-in-law has good credit can mitigate yours a little if yours is less than 620 and 620 isn't an absolute requirement. You don't mention the ladies--if they have good credit they should be on the loan as well.
If you have defaulted on any federal debt, like student loans or taxes, or if you filed bankruptcy within 2 years or had a foreclosure within 3, you won't be eligible for an FHA loan. All co-borrowers have to meet all eligibility requirements.
Income Is Important
One thing in your favor is the stability of your income. Your father-in-law's fixed income and your stable job enhance your application. See my post HERE for information about documenting both your incomes. By putting your income and your expenses into an income affordability calculator, you can see how much house you can afford to finance.
Down Payment Considerations
FHA requires about 3.5% for a down payment. You also want to have some extra in the bank (enough to pay a couple of month's expenses) for emergencies.
Sub-prime Alternatives
Yes, there is still some sub-prime financing going on. But you need a large down payment and very healthy income to qualify. Your best bet is to go ahead and fill out the form on this site and see what lenders are willing to offer. A good loan agent can also advise you of the steps you can take to improve your position and qualify for a better deal.
Good Luck!
About the Author
Gina Pogol has over a decade of mortgage lending experience, in addition to practice as a paralegal for a bankruptcy attorney, and as a business credit consultant for Experian. She is also certified to underwrite Fannie Mae loans. She earned her BS in Financial Management from the University of Nevada.
All information provided “as is” for informational purposes only, and is not financial advice. MortgageCreditProblems.com, its affiliates, and any of the independent providers of information on this site shall have no liability for any informational errors or incompleteness, or for any actions taken in reliance on information contained herein.
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