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My fiance and I are trying to get a mortgage and we could really use some advice. He has a great credit score 760+ and I have a horrible credit score (I don't even know what the number is, but it's bad), the majority of my bad marks come from student loans (now consolidated and in good standing) and old credit cards from college and right after I graduated. He makes 29,000/yr and I make 43,000/yr. He's a grad student at Yale so hopefully his income will rise a bit once he finishes his PhD program (in about a year and a half) and finds a job.
The problem is that we'd like to get the loan completely in his name, because of his high credit rating and use my earnings as additional income on the mortgage application. The house we're looking at ($238,000) is a 2 family so we'd have additional rental income as well. We talked with one bank who told us that he could not use my earnings or the rental as additional income and since his yearly salary is so low, he wouldn't qualify for a loan for a house at that price.
Additional info: We'd be putting $20,000 as a down payment which is about $4,000 less than 10%. We currently comfortably pay $1,400/mth for rent so we can definitely afford the house, especially with the rental income (the unit we'd be renting out currently rents for $850/mth).
Any suggestions? Or are we out of luck on this particular house and should look for something cheaper?
The only way to use your income will be to add you to the mortgage, but your bad credit might disqualify you. You could do the loan in just his name and find a co-signer.
If you don't know your credit score, why don't you just find out? It may not be as bad as you think, but mostly, not knowing your financial may lead to another challenge during the transaction. I would think it's a great opportunity to pull all the information and get a better financial picture to plan the house purchase.
I don't know how true it is, but I've heard it's good to start looking the property that's priced at your gross annual income x 2. Also, you must consider, the insurance premium would be higher if you have a rental unit.
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