Fico Score 625, monthly income 1600(take home) Is it possible to get loan for $85,000 -100,000?

4 Comments

1. butterfly March 4, 2013

   contact a loan agent!
2. BillW March 4, 2013

   You are aiming too high at this time. $ 85k at 7%, 30 years your payment is $ 565 plus home insurance, and property taxes. You will be over budget and struggling. $ 100k at 7%, 30 years is $ 665.
   The max you can afford is around 34% of $ 1600 or $ 544. Do you have other bills? Car, Credit cards, then for sure you can’t make it work, sorry, just the reality. One solution, can you rent out a room to a trust worthy friend, that will make all the difference in the world, until you can get a job bringing in at least $ 400/mo more.
3. cardinalfanusa March 4, 2013

   I If you have no other debts (automobile, students loans, etc) and are single with no dependents, it’s very possible.

   With a credit score of 625, you’ll probably get an interest rate around 7%. At 7%, your monthly mortgage payment will be around $ 565 for 85K and $ 665 for $ 100K. You’ll also have to pay mortgage insurance (if the loan is more than 80% of the apprasied value of the property), homeowners insurance, and property taxes. If you have all of that added into your monthly payment, you’re looking at $ 650-$ 800/month.

   Also, when you’re getting your loan, you’ll have to pay all of the closing fees, which will be around $ 3000, so you’ll have to add that into your original loan.

   My advice: If you live modestly, you can afford it. If you don’t feel you can live modestly, try to save $ 5,000-$ 10,000 over the next two years, and during this time also try to improve your credit score by paying all of your bills on time and have no more than 2 credit cards. Increasing your credit score to 700+ may reduce the interest rate you could receive by more than half a point.

   Also, if this if the first home you’ve ever bought, look into a first-time homebuyer’s loan. They typically offer interest rates a full percentage point lower than your average mortgage.
4. bex March 4, 2013

   Principal and interest on $ 85k will be $ 551 at 6.75% for a 30-yr fixed. Add taxes (1% for the sake of argument) and insurance (just grabbed $ 50 as a round number) and your monthly payment is around $ 671. Presuming gross monthly income of $ 2400, this is a housing debt-to-income ratio of 28% which is about the max that will acceptable with your FICO. This does not include any other monthly obligations which you left out of your query. Total debt-to-income ratio should be under 35% (add all monthly obligations and divide that sum by your gross monthly income).

   Principal and interest on $ 100k will be $ 648 at 6.75% for a 30-yr fixed. Taxes at $ 83, Ins $ 50…principal, interest, taxes and insurance (PITI) will be $ 781. Still Presuming gross monthly income of $ 2400, this is a housing debt-to-income ratio of 32% which is probably not going to happen with your FICO even with no other household debt.

   I used a higher rate for calculation based on your FICO score. Another factor that will affect your rate will be the amount you have to put down. At $ 85k you will need at least $ 20k to get the best rate (20% down and min $ 3k closing costs) for the $ 100k loan, expect to bring $ 23 – 25k.

   If you do not have 20% down, expect to go with an FHA first-time homebuyer program (if you qualify) or pay private mortgage insurance (PMI). PMI will run you $ 50-100/mo and factor back into your debt-to-income ratios.

   Without any further information, it does not sound to me like you are *quite* ready to buy. If you have the option, plan to take another year or two to repair your credit and save your down payment. Mortgage rates aren’t going to fly up any time soon and I understand lenders are becoming a lot more choosey with regard to borrowers these days, as well.

   Whatever path you choose, best of luck to you! Even if it’s not today, you are well on your way to becoming a homeowner and you will love it, that I can guarantee!