Posted on: 24th Aug, 2009 04:42 pm
My wife and I are finally debt free are trying to figure out how soon we should buy a home. We make combined 120K now and will have 25K in savings in 6 months. We have another 15K in an Roth IRA. My score is 680, hers is 780. We have $12K in a student loan ($150/month) and nothing more. Our area is tough to find a house and I think we need to 450K to feel its worth it. All the calculators come out to us affording 380K. So my questions are: is there any scenario we'd be able to get approved for 450K in 6 months? Another question is related to income. We both get free phones from work, and I have a company provided vehicle - these are perks that we can't prove with a W2, but would this adjust our DIR? Final question has to to do with savings. How much of our savings (after closing costs) can we actually put towards the down-payment? 25K + maybe $10K from the IRA? How much to we need to keep as reserves in the bank.
Everyone seems to talk about saving 3.5% for FHA but don't mention saving any money to keep in the bank after closing in order to qualify.
Much appreciated.
Everyone seems to talk about saving 3.5% for FHA but don't mention saving any money to keep in the bank after closing in order to qualify.
Much appreciated.
I should add I've been employed at the same company for 9 years, my wife 5. We'll probably have to come up with 5K in yearly property taxes.
sorry I posted as guest above,
THANKS
sorry I posted as guest above,
THANKS
Hi morabito,
Your credit scores are good enough to get you a loan. If you want a conventional loan, your scores should ideally be more than 700. But 620 is not a bad score either. You are debt-free and currently have only a student loan obligation. So, your debt to income ratio should not be a problem while applying for a loan.
In order to get approved for a larger loan, your DTI ratio should be good. Since you have limited debt obligations, I believe it is your income which holds the key to your qualification for a loan. Your payment towards the mortgage should not ideally take up more than 36% of your income. If it exceeds too much more than that, you will not qualify for a larger loan amount.
Your credit scores are good enough to get you a loan. If you want a conventional loan, your scores should ideally be more than 700. But 620 is not a bad score either. You are debt-free and currently have only a student loan obligation. So, your debt to income ratio should not be a problem while applying for a loan.
In order to get approved for a larger loan, your DTI ratio should be good. Since you have limited debt obligations, I believe it is your income which holds the key to your qualification for a loan. Your payment towards the mortgage should not ideally take up more than 36% of your income. If it exceeds too much more than that, you will not qualify for a larger loan amount.
If you are going for an FHA loan, you need to put down only 3.5% of the purchase price. However, for conventional loans you need a down payment of at least 10%, but preferably 20%. The amount of savings, that you need to keep in your account as reserves, depends on the lender. Most lenders want the borrower to have at least 6 months PITI in reserve in the bank account.
Looking at an FHA mortgage, your income and $25,000 cash cover everything up to a purchase of $500,000. Down payment is at least $17,500 and rest for closing costs. Keep the IRA for reserves.
The problem with an FHA mortgage is concerning what county the property is in becasue all counties have FHA limits. IF the county is a high cost county, you are ok. If not, the purchase price may be controlled by the FHA county limit.
What county or counties might the purchase be in?
The problem with an FHA mortgage is concerning what county the property is in becasue all counties have FHA limits. IF the county is a high cost county, you are ok. If not, the purchase price may be controlled by the FHA county limit.
What county or counties might the purchase be in?
Hi morabito
welcome to the forum..
your score is good. you need to do proper market survey for property.
welcome to the forum..
your score is good. you need to do proper market survey for property.
with your credit scores, you'd probably be approved with no reserves, but that shouldn't stop you from saving. you cannot tap into your free phones to help your debt ratio, and if you can demonstrate that your car payments are subsidized, you can (possibly) take a portion of that subsidy and use it in that vein.
How would I demonstrate that my car payments are subsidized? A letter from my employer?
I'm looking in Middlesex county which comes in at 523K.
Is 500K approval really possible with 5K in taxes? I'd be happy to have that - even 450K but none of the calculators come to that. What gives.
THANKS for the replies guys!
I'm looking in Middlesex county which comes in at 523K.
Is 500K approval really possible with 5K in taxes? I'd be happy to have that - even 450K but none of the calculators come to that. What gives.
THANKS for the replies guys!
The maximum FHA mortgage in Middlesex County for single family house is $523,750. That covers what you are looking to do.
The free phone and company paid cars do not matter. Your income is fine without any of that stuff, which is probably not doable anyway--probabaly can not increase income due to those items, but, it is not necessary so forget about it.
The free phone and company paid cars do not matter. Your income is fine without any of that stuff, which is probably not doable anyway--probabaly can not increase income due to those items, but, it is not necessary so forget about it.
You are lucky. You are in Massachusetts and one of the moderators who answers many of these questions, including yours, is George Akerly.
Members are not allowed to ask for your business, they are only supposed to anwer your questions, but, if you like their answers, they hope you contact them.
I personally do not know Gerage Akerly, but, I read all his responses every day.
So, since Gerge can not suggest you call hom, I SUGGEST YOU CALL or E_MAIL GEROGE and establish a working relationship right now. No need to be on this blogging web site any longer.
Members are not allowed to ask for your business, they are only supposed to anwer your questions, but, if you like their answers, they hope you contact them.
I personally do not know Gerage Akerly, but, I read all his responses every day.
So, since Gerge can not suggest you call hom, I SUGGEST YOU CALL or E_MAIL GEROGE and establish a working relationship right now. No need to be on this blogging web site any longer.
Hi morabito,
i do not think that perks like free phones and company provided vehicle can increase your mortgage amount. as these are reimburesement of your actual expenses in other words.
i do not think that perks like free phones and company provided vehicle can increase your mortgage amount. as these are reimburesement of your actual expenses in other words.
Well these 'perks' are things that would be wrapped into a salary if I were to change jobs. In other works - my salary is a lower level because of what they're giving me - car, phone, computer etc . These are items for personal use, not for company use. I'm not talking about a reimbursement for travel here. At another company I'd be making 10K more without these perks. There is no way to adjust for this???