Getting a mortgage today is easier for some than ever, and essentially impossible for others. Let me break down some of what is happening in the industry today.
To obtain a mortgage you will need a salaried income or 2 years verified tax returns (adjusted gross income).
As a general rule, FHA is insuring the bulk of the mortgages being executed in the market. Most lenders have overlay guidelines resulting in 640 being the minimum credit score accepted for a FHA loan. FHA guidelines provide for a 3.5% down payment – which is the lowest option in most markets.
If you have better credit – something like 680 or higher – you probably qualify for conventional financing. In most cases, you would be required to put down at least 5% of the purchase price to qualify.
For those with stronger numbers – 700 or higher, I have one lender who can do a conventional product that only requires 3% down.
Similarly, if you have a little more money down, I know of a lender than will do FHA financing for people with credit scores in the 500′s.
If you are self-employed, it is nearly impossible (even with 50% down). The only way to qualify is with 2 years of tax returns. Most banks are taking either the average of the two years or the last year – whichever is lower – as your “income”. The banks are using adjusted gross income as the number to work from with rare exception. They will allow additions for things like depreciation, but not much else.
If you are a 1st time home buyer, are buying in certain areas, or will only own one property and it will be your primary residence, there are a number of down payment assistance programs in the market. These are unique – typically to your state, county, and possibly city. If you buy a HUD home, there are programs where you can buy a home with as little as $100 down.
The market is changing daily. Contact your real estate professional for a referral to a mortgage expert in your area.
