Posted on: 13th Apr, 2007 08:38 am
HI!
I am 28 years old; I am a college graduate and have a stable job (same company over the past five years). I currently make 60k a year; I am single and have no kids. My credit score is 780. My savings are roughtly 25k.
My landlord recently died and her daughters are selling the duplex where I live. The property is located right next to a major university, and most of the properties in this area are for rent.
I would like to buy the property and stay where I currently live. In addition, I would like to rent the other part of the duplex (2BD/1BR). A similar property runs for about 1,500/month in rent.
The house value is 370k. Do you guys belive I could obtain a mortgage taking into account my credit, income and possible additional income if renting the other part of the duplex?
Thanks,
I am 28 years old; I am a college graduate and have a stable job (same company over the past five years). I currently make 60k a year; I am single and have no kids. My credit score is 780. My savings are roughtly 25k.
My landlord recently died and her daughters are selling the duplex where I live. The property is located right next to a major university, and most of the properties in this area are for rent.
I would like to buy the property and stay where I currently live. In addition, I would like to rent the other part of the duplex (2BD/1BR). A similar property runs for about 1,500/month in rent.
The house value is 370k. Do you guys belive I could obtain a mortgage taking into account my credit, income and possible additional income if renting the other part of the duplex?
Thanks,
"Do you guys belive I could obtain a mortgage taking into account my credit, income and possible additional income if renting the other part of the duplex?"
Dericharris, you have a great score of 780, from the score point of view you will not face any problem.
Dericharris, you have a great score of 780, from the score point of view you will not face any problem.
My question might be vague. I was talking about a $370k mortgage, not just any mortage.
Hi Dericharris,
Lender will look at ratio of your monthly housing costs to your monthly gross income, housing costs like mortgage principal, interest, taxes and insurance should be around 33% of your income. And the other ratio is the debt to income ratio that you have, lender would accept as much as 38% ratio of your monthly debts which would include the expected housing costs, credit card payments and other loan payments to your gross monthly income.
For a $370,000 house, you need to decide how much downpayment you can make, 25k will be short of 20% down that is normally required and you will need to pay for PMI.
Now you can look for fha loans which requires 3% downpayment instead which you will be able to make with the savings you have. But there are FHA loan limits depending on the area you are in. If you can tell where the house is situated then I can give you the details of the loan limits applicable in your area.
David
Lender will look at ratio of your monthly housing costs to your monthly gross income, housing costs like mortgage principal, interest, taxes and insurance should be around 33% of your income. And the other ratio is the debt to income ratio that you have, lender would accept as much as 38% ratio of your monthly debts which would include the expected housing costs, credit card payments and other loan payments to your gross monthly income.
For a $370,000 house, you need to decide how much downpayment you can make, 25k will be short of 20% down that is normally required and you will need to pay for PMI.
Now you can look for fha loans which requires 3% downpayment instead which you will be able to make with the savings you have. But there are FHA loan limits depending on the area you are in. If you can tell where the house is situated then I can give you the details of the loan limits applicable in your area.
David
Yes Dericharris, fha loan will be more suitable for you, as with it you will have to make very less downpayment.
If the house you are looking to buy does not meet the loan limits fixed for your region then you can also look for 100% financing where you will not have to make any down. But 100% financing will have somewhat higher rates than normal.
If you want you can check the mortgage limits applicable in your region from this page: https://entp.hud.gov/idapp/html/hicostlook.cfm
If the house you are looking to buy does not meet the loan limits fixed for your region then you can also look for 100% financing where you will not have to make any down. But 100% financing will have somewhat higher rates than normal.
If you want you can check the mortgage limits applicable in your region from this page: https://entp.hud.gov/idapp/html/hicostlook.cfm
"The house value is 370k. Do you guys belive I could obtain a mortgage taking into account my credit, income and possible additional income if renting the other part of the duplex?"
Your 780 score tells that up to now you have been able to maintain your finances quite nicely. That is one of the positive factors for you plus you have a continuing and stable job for the past 5 years.
But you need to also calculate whether you will be able to afford the monthly mortgage payments on this loan you are planning to take with your current income. Your calculation on whether you are able to afford the payments or not will largely depend on the other types of monthly expenses you have and after paying for those, how much will be left for you to spend on mortgage payments. And that is what lenders will also be looking at.
Cerry M. Klein
Your 780 score tells that up to now you have been able to maintain your finances quite nicely. That is one of the positive factors for you plus you have a continuing and stable job for the past 5 years.
But you need to also calculate whether you will be able to afford the monthly mortgage payments on this loan you are planning to take with your current income. Your calculation on whether you are able to afford the payments or not will largely depend on the other types of monthly expenses you have and after paying for those, how much will be left for you to spend on mortgage payments. And that is what lenders will also be looking at.
Cerry M. Klein
Thanks everyone for responding to my post.
carnahandavid, I am situated in Austin, Travis County, TX.
The only debt I currently have is my car (300/month) and student loans (200/month).
I would like to stress that if I buy the property, I could rent half of the duplex and bank in $1500/month. The duplex is right next to a large university, and students are always looking for places to live around here.
carnahandavid, I am situated in Austin, Travis County, TX.
The only debt I currently have is my car (300/month) and student loans (200/month).
I would like to stress that if I buy the property, I could rent half of the duplex and bank in $1500/month. The duplex is right next to a large university, and students are always looking for places to live around here.
Dericharris, basic standard mortgage limits for FHA loans for two-family unit is $256,248 for Travis county, which is lower than what you require. But you can look for 100% financing options.
And the possibility of rental income that you would be able to get after purchasing the house might not be considered to qualify you for a loan as it is not certain yet that you will actually get students.
And the possibility of rental income that you would be able to get after purchasing the house might not be considered to qualify you for a loan as it is not certain yet that you will actually get students.
Hi Dericharris,
I personally believe a duplex is a good choice of affordable homeownership. By renting one unit and staying in the other, you can reduce your mortgage costs by making payments with the rental installments you get per month. So, on hand, you rent and earn to pay your home loan while on the other hand, you build up equity by repaying the loan.
Considering your situation, if you can make a certain amount of down payment on the duplex, then purchasing it with an FHA loan will not be a problem. The maximum limit allowed for a duplex in high cost areas is around $306,196.
If you have a sound financial status, then qualifying for the loan will be easier. With an FHA loan, you will have to stay at one of the units for at least a year as such loans are offered against owner-occupied properties.
Good luck!!
I personally believe a duplex is a good choice of affordable homeownership. By renting one unit and staying in the other, you can reduce your mortgage costs by making payments with the rental installments you get per month. So, on hand, you rent and earn to pay your home loan while on the other hand, you build up equity by repaying the loan.
Considering your situation, if you can make a certain amount of down payment on the duplex, then purchasing it with an FHA loan will not be a problem. The maximum limit allowed for a duplex in high cost areas is around $306,196.
If you have a sound financial status, then qualifying for the loan will be easier. With an FHA loan, you will have to stay at one of the units for at least a year as such loans are offered against owner-occupied properties.
Good luck!!