Question: Hi everyone, > I’m considering buying my first house in the Chicago-land area, but > first I want to see how likely it is that I can qualify for a loan. > Here is my situation:
> I’m looking at homes in the $100-$120k range. I don’t have a lot of > cash on hand but I could probably scrape up about $10k in the next > couple months. The problem is that I’m currently a contract > worker(W2) and I don’t have a very stable employment history. I > graduated from college in December 1999 and didn’t get full-time work > until September 2000. I was working then until August 2001 and was > again unemployed until March 2002. Both contracts were at the same > company and it’s likely I could be hired there again when my current > job is up (around October), possibly even as a permanent employee. I > had some money saved up and I’m currently still living at home so > being unemployed wasn’t a big problem. > My current gross income is $40000/yr and I have no debt to speak of > (ok, I owe $80 dollars on my student loan, which I’ll pay shortly). I > have a credit score of 770 (equifax) which seems to be pretty decent.
> So anyway, what are my options? If I have to I’ll just rent for > awhile but I hate to throw away $750 a month. And I really want to > buy while interest rates are still low.
> Any advice appreciated.
Answer: First of all, your credit is more than pretty decent; it’s excellent.
Your employment history could be a non-event. Most lenders only want the most recent pay stub. If you have been there 3 months and you are w2, that should be fine.
With on $10k to put down, you are probably going to need a loan program geared toward a first-time home buyer. FHA is the traditional answer. However, based on your information, I will go out on a limb here and say avoid FHA. There are now low/zero down programs from lenders that can be better than FHA if you have good credit. FHA carries an additional 2% fee financed into the mortgage that is not worth paying if you don’t have to, and the rates are generally not as competetive.
You might be able to even get a zero down loan. You have a near-perfect credit score and non-existent debt ratios.
Remember to get a full credit pre-approval before you go shopping. It greatly improves your negotiating position.
Good luck in your home search!
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