Can I qualify for a mortgage loan with credit 620-660?
by Mortgage Rates on Saturday, November 6th, 2010 | 3 Comments
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Sure.
The issue has to do with debt ratios. A rule of thumb is that you can afford a mortgage that is about 3 times your gross annual income (before taxes).
In general, lenders will let you spend between 28 to 33% of your gross monthly income on your mortgage payment (including property taxes and insurance).
Your total debt load (mortgage plus car payments and minimum payments on revolving balances) must not exceed about 38 to 43% of your gross monthly income.
These numbers are realistic general guidelines and your situation could be different.
Borderline based on credit. What about INCOME and down payment? There are no zero-down loans anymore except for V.A. loans.
The credit score will tell you the rates. For example let’s suppose that a particular person has a credit score of 730 and the other has 630. And let’s say the lender has two rates: 1) Variable -0.4% and 2) Variable +0.2%
Most likely the person with score 730 will be offered the option 1) a much better rate. This example had the purpose to show you that a good credit score will allow you to shop for better rates for a mortgage.
However, to buy a property, you need income. If you go to a bank and ask for a pre-approval (meaning the bank will tell you how much it can lend you) they are going to ask for your income.
They will also tell you the rate they can offer based on your credit score.
My opinion:
You have room to improve your credit score. And this is achieved by paying any debts off and not overloading your credit card with more than 30% of you limit. That is, if you have a credit card with 300 max you gotta spend 100 on it. If you have many things financed well try to pay them off and also try to get rid off those groceries cards or whatever cards you have from stores. They eat your score. You gotta cancel them.
I had a score of 660 a year ago and went to 731; all I did was to cancel cards; I had from gas stations cards to groceries home depot you name it. I canceled all waited 6 months and that’s it.
If you wanna buy a property 4 times your gross income should be ok. So lets say if you make 50K per year gross a 200 property would be fine. But hey don’t forget, condo fees are part of the maths meaning banks will give you a lower amount for pre-approval..
Hope this helps…