I am a first year resident looking to buy a house in the next couple of months. I am married one one child. My credit score, however, is in the high 600's. My report has my school loans, a credit card with a zero balance, and a judgement from an old land-lord dispute for $7 from 2007 that will be removed from my report this May. I own my car outright. Our current rent is $1600/mo. My wife has perfect credit. We have approximately $100k between us in the bank for a down payment. My salary is $52k a year. We want to buy a house valued around $300-320k. We have a co-signer with significant assets and perfect credit willing to co-sign for us (parent).
My questions are to the lenders that frequent this forum (or anyone else who feels they could adequately answer them): how should we approach the loan application? Would we qualify for a loan of that size? How will my credit report affect the outcome? Should we apply just using my wife's info and leave me out of it? Will the cosigner help us at all?
Any and all help/advice would certainly be appreciated.
How should you approach the loan application? First and foremost, you should find a lender who specializes in physician mortgage programs. Based on your comment above on having student loans, I’m going to guess a conventional loan will not work. Once you have located a few physician mortgage lenders in your area, start verifying their reputations. Google them, look for other residents who have used them and have written testimonials and don’t be afraid to ask for references if you need to in order to verify their reputation. It is very important for you to determine if they are a true expert.
Based on a back of the napkin analysis, yes I think you would qualify for that loan amount. To be 100% accurate, you are going to need to pull credit and look at all liabilities as well as the exact taxes and insurance amounts on the home you are looking at purchasing. You are in the ballpark. It should be doable with that down payment size.
Credit is going to be the big issue at hand. I suggest you work with a physician loan specialist who can guide you through getting your credit score up. Most professionals have credit analysis tools and can give you tips. It’s not uncommon for our clients to pick up 40 to 60 points as we are advising them to up the date of their purchase.
I would also advise you to apply with both your wife and yourself on the loan. If I was your loan officer, I would then remove your wife from the application if there are additional liabilities that make it so you could not qualify. I always advise starting the application jointly, as it is very easy to remove one person if it makes the numbers work better. God forbid something happens to one of you, but in that instance, it’s nice for both spouses to be on title for the home and on the mortgage so there is no stress with what happens to the loan and home in the case of a death.
A co-signor could help, if your debt to income is too high. The co-signor could get us over the hump. But why use that card with family if you don’t need to. I’d suggest starting with both your wife and yourself on the loan.
It would be my pleasure to advise you further if you are purchasing in one of the 13 states we lend in. UT, AZ, NV, CA, ID, OR, WA, CO, FL, TX, WY, SD and ND. Feel free to PM me with any other questions you might have.
