What is a realistic expectation of a home loan if:?

Question

1. My credit rating is about 600
2. I have no money down.
3. I would like my payments to be $1800 a month, including PTI or mortgage insurance.

I meant to originally ask what can I possibly approved for. And I think I could do 3% down depending on what I am approved for. I live in So Cali so nothing is cheap here. I would need about 300,000. Is there a chance of gettin that?

I could have about $6000 cash for closing cost....

Answer 1

In the current mortgage environment, you are unlikely to get a 'no money down' deal with a 600 credit score. Your best bet would be to go with an FHA loan, which generally requires 3% down, plus lots of documentation.

Based on the additional information you asked for, you are unlikely to be able to get a $300k mortgage for $1800 a month with a 600 score. Right now, rates are around 6% for people with good credit, which would result in a principal/interest payment of $1799, without considering PMI, homeowner's insurance or property taxes.

Since you have poor credit and very little to put down, your interest rate will be higher, you will probably have PMI and be required to escrow taxes and insurance. Your monthly payment on a $300k loan would probably be more like $2500 - $3000 per month, depending on your taxes and insurance.

You will need to do one or more of the following things to be able to buy a home:
- increase your income/payment you can afford
- increase your savings/downpayment
- increase your credit score

Answer 2

"about' 600 - Does that mean 565, or 635? Even if it's 635 you aren't the ideal candidate, especially with no money down. Do you at least have enough saved for closing costs?

You'd probably have a better chance of getting a loan if you saved up a reasonable down payment, and got your credit score up in the meantime.

Some will depend on your income and your other debt.

This is a very bad time to be looking for a marginal loan. It might have been easier a year or two ago, but right now it's tough.

Talk to a local bank - they can give you a realistic answer.

Answer 3

If you have a job and can prove your income you may have a chance. First time homebuyer programs are available. good luck.