Credit score 600, have 20% Downpymt,over 100k salary but DECLINED

36 Replies

Very frustrated... we have fair-poor credit, excellent employment, and want to buy a house $399k, can put up to 20% down, buying a primary residence, but cannot get even a pre-approval letter.  What are we doing wrong? We are able to pay off necessary items to rapid rescore over 620 but still cannot get a pre-approval letter for our dream home that’s about to slip away today.  How do people who have the same credit, more debt and much less income buy houses???

take the time to fix your credit. you're paying unnecessary interest, and based on your score and impatience to go buy another expensive asset it's clear to see why a bank thinks this is too risky.

be a good money manager first.

I don't know why you think other people have the same credit and buy more house. I have an 830 credit and own half the house you're buying. a 675 score is us AVERAGE, and $400K house is far above AVERAGE. This kind of stretching results in poor credit scores.

champagne taste......

You can tel then whatever you want but if you don’t fit their risk models or meet the requirements you’ll be denied.

Fix your credit. That’s the easy part when you make money. Most people have great credit and no money. Credit score is easier to fix then getting money

Originally posted by @Jeb Brilliant :

@Cynthia Walker Where is the home? 

Yeah, this is important as you may be over FHA limit I think.

Keep in mind you're on a real estate investing forum and you're buying what many (most?) here would consider a liability. Are you interested in real estate investing or just scouring the internet for answers?

That may be too much house for you. 100K income, I have learned, doesn't go as far as it sounds.

That dream home slipping away is likely a blessing in disguise. One time, we found our dream home in foreclosure. We put in an offer, bank was not interested in any offers as it was about to make it's way to the market (which it listed for a few thousand over our offer)...anyway, had we bought that house, we would have been in trouble as there was a job loss just a month or 2 later. Also, we would not be investing in real estate right now.

@Cynthia Walker

Looks like you applied for conventional loan, which has stricter fico requirements. If you went FHA, the minimum would be 580, see below link.

https://thelendersnetwork.com/fha-loan-credit-scor...

If you make over 100k salary, you are still eligible, but you are not what is the typical FHA borrower. There are some negatives like paying higher mortgage insurance called MIP. The interest rate might be better than conventional since you would be dinged for low fico.

Overall, a fico score is your history to repay. You don't have a good track record. Accept your fico and try to improve in the future. FHA better than nothing.

Terry

Thanks for the helpful replies.  The home is in Northern Virginia.  Income is $130k.  Debt is $8,000 to be for rapid rescore and then they “may” give a pre-approval letter in 24-72.  Only remaining debt is $14k car loan.  

To answer one of the questions above, I have been on Bigger Pockets for a few months, learning about investing because it interests me.  Same reason I read other sites, forums, blogs...because I read about what interests me, much like what I guess most everybody does.  

I’m “impatient” to buy a home because our landlords have defaulted on their mortgage and are selling...and for the last five months they have refused to repair the hvac and I’m tired of paying rent every month (always pay early/ on time for the last 29 months) and I told the landlords that they need to agree to end the lease early because it’s  not okay for me to keep paying them rent and they won’t fix a major item and they have broken the lease.  They have agreed to end the lease early and so now I’m moving 6 months before I had planned to and do not want to start a lease elsewhere because a) there’s not much available to rent other than in large crowded complexes and b) nothing is available for short term leases for anywhere near a reasonable rental rate.  

Unfortunately in Northern Virginia, a crappy townhouse is caviar priced. So for any seasoned investors who want to buy SFH to rent out, I would certainly suggest Northern Virginia because there are literally bidding wars for rentals and when the agents/landlords get a large amount of applications, they obviously increase the rent asking price. It happened last week to a house I was interested in potentially renting if I can't buy.

that's some great income for such a low fico.. you want to clean that up..

talk to a mortgage lender that is direct lender.. they will usually come up with a program that works.

if your w 2 FHA should work.. conventional you need credit up and keep it up..

You seem upset you didn’t get the loan ? Why did you even apply with a 600 score ? There’s a majority of landlords on here who wouldn’t even rent a small apartment unit to a tenant with a score like that . I’m not sure why anybody with such a low credit score would even think they could get a loan on a 400k house . That’s a whole lot of house . Why is your score that of poor person yet your income that of a upper middle class person? Seems very odd to say the least  

Originally posted by @Dennis M. :

You seem upset you didn’t get the loan ? Why did you even apply with a 600 score ? There’s a majority of landlords on here who wouldn’t even rent a small apartment unit to a tenant with a score like that . I’m not sure why anybody with such a low credit score would even think they could get a loan on a 400k house . That’s a whole lot of house . Why is your score that of poor person yet your income that of a upper middle class person? Seems very odd to say the least  

Most lenders w/ FHA will go down to 620, some go down to 580, and a few will go down to a 500 FICO score.

There is a category of persons, believe it or not, who buy a home to live in because it's easier to buy than find a landlord that'll rent to them. Fun fact, mortgage lenders only check for financial convictions in the borrower's past... violent crimes of all sorts are A-OK.

Originally posted by @Chris Mason :
Originally posted by @Dennis M.:

You seem upset you didn’t get the loan ? Why did you even apply with a 600 score ? There’s a majority of landlords on here who wouldn’t even rent a small apartment unit to a tenant with a score like that . I’m not sure why anybody with such a low credit score would even think they could get a loan on a 400k house . That’s a whole lot of house . Why is your score that of poor person yet your income that of a upper middle class person? Seems very odd to say the least  

Most lenders w/ FHA will go down to 620, some go down to 580, and a few will go down to a 500 FICO score.

There is a category of persons, believe it or not, who buy a home to live in because it's easier to buy than find a landlord that'll rent to them. Fun fact, mortgage lenders only check for financial convictions in the borrower's past... violent crimes of all sorts are A-OK.

That’s very interesting  . I did not know that 

Credit scores are fickle things, and low credit scores are difficult to repair if you lack a mortgage.  Credit Karma, credit sesame, all of them, tell you you need to diversify with a mortgage.   Yeah, DUH.  Chicken or the egg.  

I've been building mine back up for the last 5 years or so.  $550,000 worth of unexpected medical bills plays havok with your credit score and it takes 4-5 times as long to build it back up as it does to take it down.  Without a mortgage to prove "stability" every single thing hits harder.  I paid down $3000 worth of credit card debt in April and raised my scores by...43 points.  Husbands Dr ordered MRI and Xray and ultra sounds, and the $360 copays went on plastic and it dropped my TU by 77 points.  

And yes, those of us in this position know quite well that the "best" landlords won't have us.  At least lenders look at WHY your score is so low and don't count medical against you as hard as landlords do.  The sane, intelligent thing is to quit dealing with landlords and buy.  

@Cynthia Walker, CreditKarma has a thing that you can put good rental payment record for the past two years (verified by landlord) on your credit reports.  its not a huge jump but 20 points is 20 points.
Can you get a cosigner?  Parent?  Sibling?  Uncle Fester? 

Originally posted by @Wayne Brooks :

Yeah, FHA you generally need 620 and conventional 680ish. With 20% down you'd no pmi/mip on fha or conventional.

FHA loans have mortgage insurance no matter your down payment.

@Cynthia Walker what is it that is keeping your score so low, your debt doesn’t seem to be too high compared to your income, are there late payments, etc.? Have you asked the lender what other steps you need to take to help raise the score, generally they can give you some specific actions that will help move the needle more quickly.

@Brandon L. the home is in Culpeper County...because I can not afford the $750k that it would cost to buy what we would want in the DC metro area.  Also I do truly love parts of Culpeper County, another reason to buy there.

@Dennis M. unfortunately $130k salary in DC Metro IS POOR.  It’s really not much money for our area.  

@Cynthia Walker , whatever you do don't pay anyone to help fix your credit! Go to MyFico.com and read through the community forums. It is similar to BP community in that you can get a LOT of free advice and information from members to fix yourself up.