If I owe money to creditors (NOT the IRS) how can I get a home loan?

I want to buy a home, but no one will allow me to get a mortgage, not even an FHA because I owed money to creditors. I owed a whopping $352 that I paid off yesterday but they said it has to be off my record for 12 consecutive months before I can qualify, what can I do to get qualified now and not have to wait an entire year? And just fyi, even with those on my credit report my lowest FICO score of the three bureaus was 701 so I am over the required score for an FHA loan

Update:

Yes, that IS the only thing holding me back. I have sufficient income. My friend just got approved for 175,000 and he makes 15,000 a year less than I do and I have my spouses income on top of that.

Second, I was told by them that ALL debts if it is $10,000,000,000 or 1 penny must be paid off before they can approve me for a loan. My spouse's credit scores are higher than mine so they are taking my credit score (701) which is above the 640 needed for an FHA loan. So its not my credit score, its not my income, it is that one bill that they said is the hold up. I was told that I will be allowed to get a loan after 12 months has gone by and that I don't get any more negative marks on my credit in that time frame.

Lastly, I haven't gone to another lender because I don't want them to keep pulling my credit report and dinging my score and making it harder and harder to get a loan.

5 Answers

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  • Dan B
    Lv 7
    6 years ago
    Favorite Answer

    Not all debts have to be paid off. But all debts that are in collections do. Then they want to see a clean payment history for 12 months on any existing debts. With the numbers you provided, you should have been able to secure a mortgage, maybe not the best interest rate, but a mortgage nonetheless. Look at your credit profile and clean up any negatives that can be cleaned up. Truthful ones, of course, cannot. Don't use a credit repair company. They promise much but deliver little.

    There are people who make 6-figure incomes who chronically pay late even if they have the money. Then there are people who make less than $50k a year who pay their debts on time, every time. So income is not really an indication of one's willingness to pay their debts (even though they have the resources).

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  • DON W
    Lv 7
    6 years ago

    The amount doesn't really matter. You apparently showed a pattern of not paying your debts on time. Banks are VERY nervous these days, since they have so many non-performing mortgages in their portfolios, and are under government scrutiny to ensure that they don't loan to people unlikely to pay back on time.

    With that said, if you have a decent income, and $352 was truly the only amount that you were in debt for, you might as well talk to other banks and mortgage companies to see if anyone will give you a break.

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  • CatDad
    Lv 7
    6 years ago

    Have you checked with other lenders? This seems unusually harsh and I can't imagine that a collection account this small would be a deal breaker. I'm guessing that there are other factors involved like insufficient income.

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  • Jeff T
    Lv 6
    6 years ago

    You really don't want a home loan right now. The home will own you.

    Here's what you should do:

    1) pay off all your debts.

    2) save up cash.

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  • 6 years ago

    No.

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