Posted on: 05th Nov, 2011 11:40 pm
My husband and I are having a little bit of difficulty understand how much home we could afford. We know we will need to get pre-approval to know for sure, but we want to wait unil after the new year to get the pre-approval.
We are interested in purchasing a house that is between $300,000 - $350,000. Typically, the yearly tax cost for houses in the towns we are interested in cost $7000-$9000 (Nassau County, Long Island, NY). Our yearly gross income is approximately $82,000. Our credit scores are both over 700. Mine is approx 770 and my husband's is approx 715. We are looking to get an FHA loan and put 3.5% down payment on the house. Our only back-end ratio amount (besides the anticipated mortgage payment) is our student loans, which is approximately $600/month combined. We both do not have car payments and we never carry a credit card balance month to month (we pay all balances immediately). We are currently renting and our monthly rent is $1550.
Whenever I use an online mortgage calculator, it seems to come up that we can only afford a house that is $270,000. However, some FHA sources indicate that we could possibly afford a house that is within our target price range ($300,000 - $350,000) through applying for an FHA loan.
Could you please provide your expertise in this area and give us your opinion on the approximate cost of a house we could afford using a 31/43 DTI ratio (FHA max ratio)? I also read on some sites that these numbers could go higher with good/excellent credit. Would banks really be open to giving us a loan with a higher DTI ratio?
Thank you so much for your assistance! We would love to buy a house but we want to wait until we can get a house within our target price range. Any information you could provide would be greatly appreciated!
We are interested in purchasing a house that is between $300,000 - $350,000. Typically, the yearly tax cost for houses in the towns we are interested in cost $7000-$9000 (Nassau County, Long Island, NY). Our yearly gross income is approximately $82,000. Our credit scores are both over 700. Mine is approx 770 and my husband's is approx 715. We are looking to get an FHA loan and put 3.5% down payment on the house. Our only back-end ratio amount (besides the anticipated mortgage payment) is our student loans, which is approximately $600/month combined. We both do not have car payments and we never carry a credit card balance month to month (we pay all balances immediately). We are currently renting and our monthly rent is $1550.
Whenever I use an online mortgage calculator, it seems to come up that we can only afford a house that is $270,000. However, some FHA sources indicate that we could possibly afford a house that is within our target price range ($300,000 - $350,000) through applying for an FHA loan.
Could you please provide your expertise in this area and give us your opinion on the approximate cost of a house we could afford using a 31/43 DTI ratio (FHA max ratio)? I also read on some sites that these numbers could go higher with good/excellent credit. Would banks really be open to giving us a loan with a higher DTI ratio?
Thank you so much for your assistance! We would love to buy a house but we want to wait until we can get a house within our target price range. Any information you could provide would be greatly appreciated!
Hi e l l i e!
Welcome to forums!
The criteria for FHA loans are different compared to that of conventional loans. As the terms and conditions are flexible in case of FHA loans, you may qualify for a higher loan amount. For conventional loans, you may to give a down payment of 20% and you may qualify for a lower loan amount. With a higher dti, it will become quite difficult for you to qualify for a loan.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
The criteria for FHA loans are different compared to that of conventional loans. As the terms and conditions are flexible in case of FHA loans, you may qualify for a higher loan amount. For conventional loans, you may to give a down payment of 20% and you may qualify for a lower loan amount. With a higher dti, it will become quite difficult for you to qualify for a loan.
Feel free to ask if you've further queries.
Sussane
Maximum purchase price with a total 45% debt ratio would be about $300,500
It is difficult to be exact because property taxes are unknown until the exact property is identified and they affect the calculation. I used $8,000 for property taxes.
Not sure what calculator you used and what debt ratios you used. When mortgage lenders run the automated underwriting program, we get approvals to a 45% total debt ratio frequently, sometimes higher. I used 45% because I know we get approvals for that all the time.
Are any of the student loans in deferral status?
It seems you are saying you are paying already $600 a month.
How many student loans is that? If there are several have they been consolidated into one loan that usually has lower monthly payment than all the individual separate loans and payments.
Do any of the student loans have smaller balances that might be paid off and get the payment out of the debt ratio and then can buy over $300,500?
If you have the 3.50% down payment, do you have the closing cost money also?
It may be possible to pay off a student loan and get all the closing costs from the seller, the purpose being to get some student loan monthly payments out of the debt ratio
The ONLY way to know if a debt ratio over 45% is OK is to have a mortgage lender enter a complete application and run the automated underwriter program.
It is difficult to be exact because property taxes are unknown until the exact property is identified and they affect the calculation. I used $8,000 for property taxes.
Not sure what calculator you used and what debt ratios you used. When mortgage lenders run the automated underwriting program, we get approvals to a 45% total debt ratio frequently, sometimes higher. I used 45% because I know we get approvals for that all the time.
Are any of the student loans in deferral status?
It seems you are saying you are paying already $600 a month.
How many student loans is that? If there are several have they been consolidated into one loan that usually has lower monthly payment than all the individual separate loans and payments.
Do any of the student loans have smaller balances that might be paid off and get the payment out of the debt ratio and then can buy over $300,500?
If you have the 3.50% down payment, do you have the closing cost money also?
It may be possible to pay off a student loan and get all the closing costs from the seller, the purpose being to get some student loan monthly payments out of the debt ratio
The ONLY way to know if a debt ratio over 45% is OK is to have a mortgage lender enter a complete application and run the automated underwriter program.
