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I'm casually exploring the option of selling my house and buying a condo. I bought my house 15 years ago, and it's been a money pit, so my credit score has gone down a bit. I'm not really ready to commit fully to the process of home-buying, but am curious as to what kind of mortgage I'd qualify for. This would help me determine if I should even bother to look right now, or if the kind of place I'm interested in is completely out of range.

The thing is, in the U.S. if you go through mortgage pre-qualification, it gets reported to the credit monitoring agencies, and can affect your credit score (or so I hear; it's been a long time.) I do know that just applying for a credit card can affect your credit score, even if you never user the card, so I would imagine something as large as a mortgage would have the same effect.

Is there any semi-accurate way to find out about how much I'd qualify for, without having it be reported to Experian et. al.?

  • You can get your credit score without a pull from a number of services, then you can use that score to see what you qualify for by either using the same service or something like bankrate.com. – Pete B. Mar 1 '18 at 14:50
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Yes, it is possible, but it depends on the lender. Some lenders can do a "soft pull" which gets your credit info without affecting your score. They can then do their calculations based on that and when it's time to move forward with the loan they do a "hard pull" credit inquiry which is when it affects your credit score. Note that hard pulls have a minor impact and only affect your score for at most 1 year, though they are visible on your report for up to 2 years.

Another option is for you to get your own credit report for free (also a soft pull) and provide the report to a lender. Some lenders may be able to use that for a ballpark calculation.

Also, note that if you let a mortgage lender do a hard pull, you can do as many other hard pulls (from other mortgage lenders) within 45 days without having any additional impact on your credit score. More info here.

If you're just looking to estimate how much you can afford without speaking to a lender, try some online calculators such as here, here, and here.

  • Thanks. My fault for not being clear; I did already know that. What I was hoping for was some kind of calculator where I could plug in my income, assets, and credit score, and get a kind of estimate that says, "90% of people who had the same data as you were approved for x." I figured there was no such thing, but no harm in asking. – EmmyS Mar 1 '18 at 18:21
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    @EmmyS - OK. I added some links to online calculators which should give you a ballpark. – TTT Mar 2 '18 at 14:41
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Emma, much of your question can be answered the same as how I answered What percentage of my budget should the mortgage be?

Mortgage underwriting starts with the 28/36 rule, 28% of your income can be applied to housing cost.

In my other answer, the math showed a $60K income can qualify you for about a $200K loan. This assumes the 20% down is in cash, total home price, $250K.

For what it's worth, the first link TTT offered gave identical numbers. A $60K income affording a $254K house.

In my opinion, if i were you, I'd focus on the credit score. If you are carrying any debt from month to month on the credit card(s), you have the ability to gain quite a few points by paying the bill in full before the card balance is reported. We recently wanted to renew our HELOC, the 10 year draw period was ending, and I wanted flexibility. For the 2 months prior to calling the bank, I made a payment in full the day before any balance was reported. The FICO score the bank saw was 850 for both my wife and me. Prior to my gaming the system, it was hovering around 800. I'd strongly suggest you use an online service like Credit Karma and see your current score (Their's isn't quite a true FICO, but it's close, and the difference you see each month gives you a good idea what's happening.) Credit utilization is the one thing that easiest and fastest way to impact your score.

  • Nice answer (to the real question). If you don't mind my asking, what is your swing in utilization percentage between paying in full before it reports vs letting it report? 50 points is a big change if that's the only variable. – TTT Mar 2 '18 at 16:22
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    High 30s. In a month that I'm paying insurance (both on home and rental) along with annual donations, it's not tough to go there. In 'normal' times, having the balance reported and score lowered isn't a big deal. Since I was planning to go to a bank for a sizable credit line, I wanted to be sure to have the score as high as possible. No need to play the game, pay early, etc, except if going for new credit. (For what it's worth, charities don't mind the cost they incur for the charge, some get a preferred rate. They still have an expense to process checks.) – JTP - Apologise to Monica Mar 2 '18 at 17:01
  • That does make sense. My average spend is around 3% and if I have a crazy month it tops out at maybe 8% which is why I never see those kind of swings. My limits are probably too high though. If I ever maxed out I'd be in a world of hurt. – TTT Mar 2 '18 at 17:11

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