Hi Loan experts, newbie with a question about obtaining an FHA, which may be my first strategy for investing. Here is my situation:
I currently own no real estate. I have enough money to put down on a moderately priced property, say up to $200,000. The only debt I have a pretty high car loan. I just lost my job but had it for 14 years. I have been in my current rental for six years. In January I was released from CH 13 (Which was due to a divorce in order to pay alimony). My current FICO is 604.
We are planning to move to a different state soon. When we get there I would like to buy a property to live in, to start. I may or may not be employed at the time. What would be my chances of obtaining a FHA? I do know that 580 is the FICO requirement for 3.5% but I am sure there are other factors. Any advice on improving FICO or anything else I should be doing? Our move is about six months out.
One last question, can an FHA be used to buy a condo?
You'll need to have income to get a FHA loan. If you're moving to switch employment and have a means of verifying future employment that might work. But you'll find it difficult to get a loan without income since the loan is based on your ability to pay.
There is a 3-year seasoning period for FHA loans after the actual discharge date of a bankruptcy. So, unfortunately, you wouldn't be qualified for another 3 years. Conventional loans are 4 years.
Yes, FHA loans can be used to purchase condos, IF the condo if FHA-approved. You can find the list of approved condos here .
How long have you been making payments on the CH13? If you have made 1 year of payments, and get trustee approval, you can be approved for an FHA LOAN, even if it is an active bankruptcy. If it is discharged, and your payments always have been on time, you will be fine.
The challenge is that you do not have an income coming in, and when you do, there will be seasoning needed on that, whether it is W2 or self employment income.
Thanks for the great info guys. Brian, my CH 13 was discharged in January, all the payments were on time and everything was paid off. But I will still need a history of income high enough to make payments. It sounds like my plan will not work. I just hate to move and get tied into a rental lease instead of using that money to invest.
What if I used hard money to rehab, assuming it was a great deal, and then needed a conventional loan, would that make a difference? Thinking of the BRRR strategy.