We had a First Time Buyer call last week looking to buy a $600,000 property. He had saved approximately $60,000 for a down payment, BUT he also had a car loan and consumer debt totaling about $30,000. The payments for the car loan and the credit cards totaled over $600. In addition, the presence of all the debt kept his credit score below 680. I immediately advised him to pay off all of his consumer debt and just get an FHA Loan with only 3.5% or $21,000 down. This will vastly improve his credit score, his interest rate and his overall payment situation.
Once again, now that FHA Loans go all the way to $729,750 and FHA rates are so competitive, there is often no reason for borrowers to maintain consumer debt balances in order to maintain enough cash for a larger down payment.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167