Reply to 670 score, 16k, want to borrow 700k

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Your credit should be good enough for an FHA loan with 3.5% down. You will need money for closing costs too so you would still need to save a bit more.[/quote]

This is how we got our first home for 700k[/quote]

FHA mandatory insurance is like 1% of the loan amount annually, so 7k/12 = $583 per month just in FHA insurance premium, on top of what will almost certainly be a crappy loan rate. I was in a similar position 10 years ago - I bought a $680k house with 3.5% down and an FHA loan at a 4.25% rate. I had a kid in daycare, $2k per month but no student loans or other debts. It was rough, and I made $240k. A mortgage payment of $4k is a lot on an income of 240k when you have another 1.7k in monthly debts (or even if you don't). We had to tightly control all of our spending. I can't imagine doing it on 175k and I highly advise that you not do it[/quote]

Even if her credit score is good enough for an FHA loan, she only has $16K.  If she put that entirely towards the 3.5%, that means she could afford up to $450K for a home, with that as her down payment, bu then she doesn't have enough for any closing costs.  If you roll in the closing costs into the loan (which only some lenders will do and may increase her interest rate to do so), then she can max out at about $425K or $430K on purchase price.  And I've only seen people roll in closing costs on traditional loans.  Not sure if FHA loans will allow rolling in the closing costs into the loan amount (I remember there were a lot of unusual restrictions for both FHA and VA loans).[/quote]

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