So your thinking of buying a home and like many would be homeowners you have a number of questions about the process of getting a mortgage. After all, you likely have heard horror stories about the mortgage process. The truth is, the process of buying a home and getting a mortgage is far easier then what most people realize.
As an experienced Mortgage Banker since 1991, I decided I would share with you answers to the most common questions I have received from clients over the years. It is my hope that it will help you to better understand the process so that you too can enjoy the American dream.
- Do I have to have perfect credit to get a mortgage?
No! Many clients have less than perfect credit. If you are currently past due on loans that can make the process more difficult. If you have had negative credit in the past the underwriter that reviews your loan for approval may want an explanation why you had negative credit and why it is not likely to happen again.
- Can I get mortgage if I don’t have any credit?
Clients who don’t have a credit history may still be eligible for a loan if they can verify alternative sources of credit. These sources could be items such as rent, insurance, cell phone, day care and utility payments. Even an established pattern of being able to save money can help. Some programs allow for co-borrowers who can sometimes assist you in qualifying for a loan.
- What is the minimum credit score to get a mortgage?
Many programs do require a minimum credit score. The minimum credit score requirements can vary from one program to another. We can help you to determine what programs you may qualify for. Clients with high credit scores generally will have many more options than clients with lower credit scores.
- Can I get a mortgage if I have unpaid collections or judgements?
Collections and/or judgements that are outstanding do not necessarily disqualify you for a mortgage. The underwriter who will review your loan for approval will likely want an explanation as to why they exist and will then make a determination as to whether or not they will be required to be dealt with prior to your final loan approval.
- Can I get a mortgage if I had a previous foreclosure, bankruptcy or short sale?
Clients who have had a previous foreclosure, short sale or bankruptcy can often times qualify for a new mortgage provided they meet the required waiting periods. The period of time you must wait to purchase a new home after foreclosure, short sale or previous bankruptcy can vary. I can explain to you what your options are.
- Can I get a mortgage if I paid loans late or had accounts charged off?
Depending on when your payments were made late or when your accounts were charged off, they can have an impact on your credit score and your ability to qualify. Most programs look unfavorably on negative credit within the last 12 months. This does not mean that you can’t qualify as much as it can make it more difficult.
- Can I get a better deal on my mortgage if I have great credit?
If you have a high credit score and have used credit responsibly you will find you have many more options available to you for the purchase of your home. In addition, you will qualify for better rates and terms than clients who have had credit issues.
- Do I have to have 20% down to buy a house?
Absolutely not! If that were the case most homeowners would have never been able to purchase a home. Many options are available for clients who may have limited to no funds available.
- What if I can’t come up with a down payment?
Some programs allow for $0 down payment. Not all properties or borrowers will qualify for those options. Special program exist for first time home buyers who can purchase with as little as 1% down. In addition, many programs allow you to get a gift for the required down payment. You can also in some cases borrow your down payment from eligible sources. Because you don’t have a large down payment saved, don’t be afraid to seek approval. There are a number of options available that require limited funds to purchase a home.
- Can I get a gift for my down payment?
In most cases the answer is yes! Many programs allow for a gift from a relative or someone you have a long standing relationship with.
- Can I borrow for my down payment?
Depending on what you are borrowing against the answer may be yes. Personal unsecured loans or cash advances from a credit card are generally unacceptable. Borrowing from a 401k or against other assets may be acceptable.
- I am a veteran who is eligible for a VA loan, how does this benefit me?
First let me say thank you for your service to our country. One of the benefits of a VA loan is the ability to qualify for a home loan with typically no down payment being required. In addition, if your transaction is properly structured you can typically purchase your home with no cash out of pocket.
- Are there programs that help with my down payment?
Yes! There are some grant and government programs that assist toward your down payment. To find out if you qualify for one please contact my office.
- Can I sell assets to come up with my down payment?
Yes! There is a process in which we have to document the sale of an asset. If you will be doing that, please contact my office and we can assist you with how to document this.
- Can I get a mortgage with less than two years on the job?
Yes! You do not have to be on your job at least two years to get a mortgage. However, the underwriter that approves your loan will want to see a consistent work history and job stability. Clients who have multiple jobs due to career advancement will not likely have a problem qualifying
- Can I get a mortgage if I just graduated and have limited job time?
This generally does not create a problem provided you can document your time in school. It is helpful if the field you are working in is consistent with the area you studied.
- Can I get a mortgage if I am paid commission?
Commission sales people should generally have two years of history of earning commission. While there are times you can qualify with less than two years history, it is much more difficult then if you can document two years history of commission earnings.
- Can I get a mortgage if I am self employed?
Like commissioned sales people you should be able to show that you have a two year history of being self employed. In some cases you can qualify with less than two years history but it is more difficult.
- I don’t report all of my income or am paid cash under the table, is that a problem?
Yes! Income that is not reported or those who are paid cash “under the table” cannot count any of that income toward qualifying. There are some tax exempt employees who may use certain portions of their income.
- Can I get a mortgage if I work for a temp service?
Income from a temporary service position can be difficult to use toward qualifying for a mortgage. Call my office to discuss your options.
- I work two jobs, can I count my income from both jobs to qualify?
You can generally count income from a second job provided that you have at least 12 months worth of history working the second job.