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Bankruptcy and Credit Scores

My husband filed for bankruptcy 3 Years ago, he has maintained a great rental history and trying to get his credit score back, right now it's about 660, my credit is in the poor 577 can he qualify to buy a house anywhere in California? Or will we be renting forever?

======ANSWER======

Hello There,

I really like it when people come by and ask such good questions.

In regards to your husband qualifying for a home loan, there are more factors to consider besides just his credit score and rental history.

While it's true, having a 660 credit score and solid rental history is a very good thing, there are more pieces to the mortgage puzzle.

You may want to take an look at fha home loan requirements for some other helpful information. The one thing you will need to keep in mind is the debt to income ratio. This page talks about it.

If your husband has sufficient income to buy the house he may be able to do so without you being on the mortgage. For FHA loans the maximum house payment is 29% of his monthly gross income.

The way they figure income is the total money earned for the last 12 months. Add them all together and divide by 12. So let use $60,000 divided by 12 which equals $5,000 a month.

So 29% of that is $1,450. This is the maximum house payment you would be able to afford to include principal, interest, taxes and insurance (PITI).

Use this handy mortgage qualification calculator to help you out with this.

With your score below 620, you very likely would not be able to apply for the FHA mortgage with him. 620 is the lowest score they are taking right now, although sometimes they have some exceptions.

So if your income needs to be calculated into the monthly payment to qualify, you may have to work on your credit to get there.

Hopefully you find this helpful.

Kind Regards,

Jeff Ragan




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