Buying a Home With Parents - Credit Scores and Income

Reader Question: My boyfriend and I along with his parents would like to buy a house together. The problem is he and I both have poor credit but decent incomes and his parents have good credit with low incomes. Would we likely qualify for a loan in today's market?

That's an interesting question. It's almost like a Zen riddle! It sounds like you offset each other's weaknesses. Since you have good income but bad credit, and his parents are the reverse, they might be able to co-sign on the loan to help you all get approved.

If you haven't done so already, I would read up on FHA home loans as well. That might be a good option for you. You would still apply for the mortgage through a private lender, but the FHA would insure the loan. This helps buyers with credit trouble and other issues get approved.

Probably the best thing to do at this point is set up an appointment to talk to a lender. They can look at your financial information (for all four of you) and pre-qualify you based on that. Pre-qualification is the process through which the lender will determine how much of a mortgage you might actually qualify for -- a ballpark range, at least. It's a good way to get the ball rolling.

To prepare for this process, you should start rounding up your financial documents. This includes your most recent W2 forms from the last couple of years, pay stubs, bank statements, retirement account info (if applicable for the parents), etc.

Hope that helps. And hey ... if you end up getting a mortgage loan and would like to share it with other readers, just send me an email when the time comes and I'll update this blog post. Information sharing is critical in this tough economy. Good luck!

-Brandon