I need a loan


I am self-employed plus second income in widows benefits…showing tax returns for that. bank deposit for self-employment,job letter. I have a good cridit score. Help. I dont have two years of 1099. So will anyone work with me?


To qualify for a traditional loan, you are going to need a minimum credit score in the 620 – 640 range though most require 680. USDA loans with a credit score of less than 580 are denied if you have been late on any payments. (Reference: http://www.rurdev.usda.gov/SupportDocuments/CA-SFH-GRHUnderwritingGuide.pdf)

There are other loan programs out there that may accept less. One of these is FHA. FHA’s website states: “Minimum credit score requirements for FHA home loans depend on which FHA loan product the applicant needs. Generally speaking, to get maximum financing on typical new home purchases, applicants should have a credit score of 580 or better. Those with credit scores between 500 and 579 are, according the the FHA guidelines, ‘limited to 90 percent LTV’.” (Reference: http://www.fha.com/fha_article.cfm?id=200.)

Two years of profit and loss statements are important but not always critical. Your secondary income is a great additional factor. Plus, a 20% down payment will help immensely.

They will also examine your debt to income ratios. Banks look at these two different ways: front-end ratio and a back-end ratio.

FRONT END RATIO: This looks at the how the mortgage payment compares to your monthly income. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 33 percent of your gross monthly income.

                  Formula: Monthly Salary x 0.33

BACK END RATIO: This formula determines the maximum amount a lender will allow you to pay on all debt including housing expenses, car loans, child support and alimony, credit card bills, student loans and homeowner association fees. Your total monthly debt obligation should not exceed 40 percent of your gross income.

                  Formula: Monthly Salary x 0.40

This will help you to gauge your finances and the amount of mortgage that you can afford.

Answered 5 months ago

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