How difficult is it to get a mortgage these days, post-subprime collapse? Am I qualified to get one?

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I live in the Philadelphia area. I have two jobs(one full-time job that I’ve been at for over 1 yr, and one part-time job for extra money) and an annual income of about $ 32,000.

Overall my credit is good. My TransUnion + Equifax scores are in the 720-730 range. My Experian score is in the 690-710 range due to a long-ago public judgment from 2002 that’s been paid in full since 2003(the judgment only appears on my Experian report). I have a good mix of credit and it’s all paid current/on time. I have several credit cards(all cards paid off in full to ZERO), a paid-off personal loan, a car loan(I owe only $ 7K of the original $ 26K; it’s a 6yr loan that I’ve had for 2.5yrs now), and a student loan(I owe a little under $ 10K; my payments are $ 105/mo).

Could I “handle” a mortgage or would I get rejected? Right now I’m paying over $ 900/mo for a 1 bedroom apartment, which I think is downright b.s. I’m hoping to get a house that costs between $ 140-180K. What do you think?

  1. Reply
    May 2, 2011 at 5:26 am

    Your main issue will be the part time income, lenders will not count part time jobs unless you’ve been at the same job for over 2 years. Other than that I think you’d qualify, most lenders use the middle of your credit scores to qualify so you’d be entitled to the best interest rates with a score above 720. The last thing though is depending on how much your other liabities are you may not qualify for such a high loan amount with your income. Lenders want a debt to income ratio of about 41% or less including all credit liabilities, the mortgage, taxes , insurance and PMI, so I’d say you’d more likely qualify for about a loan of $ 120-140 depending on your other monthly liabilities. Good luck and contact a few mortgage brokers to find the best deal for you.

  2. Reply
    Steve W
    May 2, 2011 at 5:34 am

    Your credit sounds more that good enough to qualify for a mortgage. The only issue I can see is having the necessary income to qualify for the loan amount you are looking for. This can depend upon what amount you are willing to put as a down payment for the house. Assuming that your car payment is $ 400 per month + $ 105 you are paying towards your student loan, your total monthly payment (including the new mortgage) should stay at or under $ 1120 per month (42% of your monthly income). With the payments you have currently, this only leaves $ 615 per month for your principal and interest payment on your mortgage plus the costs of property taxes and homeowner’s insurance. $ 615 per monthly would get you about $ 75000. Keep in mind that stated income programs are still available. These require a 10% down payment but would allow you to qualify for the mortgage you are looking for. If you have any additional questions, feel free to shoot me an email.

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