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Home Purchase
I am a recent graduate 150k student loan debt, cc $11k car loan $450 a month. New job offer $53K starts 9/1. I did not work while in graduate school. My husband worked same job since 5/18. But income was significantly reduced last year( received unemployment) now he works 30-50 hours a week with mostly overtime and double time. His Ch 7 was discharged 7/19. Our middle scores are around 658-660. His hourly rate is 26 but his pay is more overtime and double time. he has small credit rebuilder cards of less than 1000 limits across all 3 reports. his income is around $60k, We are first time homebuyers Can he buy a home for $100k or less rent rooms out $850×3, and I do the same and use that to qualify for a home around $490K. We lived on savings this last year and are down to our last $5k we would each buy a home without any first time assistance programs that have a occupancy requirement. Once rented we would use our income and rental income to build savings to about 15k. And we want new construction and will finance our cc. Is this possible?
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Evaluating Your Prospective Home-Buying Situation
Considering your situation, let’s summarize the main aspects impacting your potential home purchase and your capacity to secure financing.
A Review Of Your Finances
Debt:
- Student Loan Debt: $150,000
- Credit Card Debt: $11,000
- Monthly Auto Loan Payment: $450
Income:
- New employment position: $53,000 (starting 1st September)
- Husband’s Salary: Accounted to approximately $60,000 with overtime
- Credit Ratings: between 658-660, acceptable.
Income and Debt Income Ratio (DTI)
Total Income:
$53,000 + $60,000 for the husband = $113000 a year, which equals $9417 a month.
Monthly Debt Accounts:
Car Loan Repayment: $450 per month
The estimated payment for the student loan, based on the standard repayment plan, could be about $1,500 per month, depending on the agreed-upon terms.
Credit Card Debt: The monthly minimum ranges from $300, depending on the plan.
Total Monthly Debt: $2,250 (This value is Such an estimate, and the final value will be slightly different).
DTI Calculating:
Income of $9,417 a month
Debts in the month stand around $2,250
During the months, DTI = 2,250 ÷ 9,417 = 23.9 %. DTI = (Debt ÷ Income) x 100. In this case, mortgage lenders will likely prefer a DTI of 36% or less for qualifications. However, some lenders are willing to accept higher ratios, provided one has a substantial rental income.
Home Purchase Feasibility
Home Price: Yes, paying around $100,000 for a property sounds achievable, especially if you rent out some rooms to recoup some costs.
Rental Income: If you can lease out three rooms for $850 each, your students’ rental income should total approximately USD 2550 monthly. That would help your DTI ratio and financial situation in general.
Potential Mortgage Payment: Given the ongoing market interest rates for a $100,000 home purchase, the monthly payment on a mortgage should be around $700-$800, including taxes and insurance, which your wages could comfortably cover.
Qualifying for a Mortgage
Credit Score: Scores within the range of 658480 to 660 have many traditional credit facilities available, although at a higher interest. A marginal improvement in your scores will be worth it.
Down Payment: You will also need to set aside a decent amount to finance your credit cards if that is essential, as your down payment would range between 3% and 20%, depending on your loan.
Alternative Lending Options: You can consider applying for FHA loans with lower minimum credit score requirements and low down payment options.
Future Plans and Stability
Building Savings: If you can generate some rental income, you should be able to start building up your savings, which is necessary for financial security and future investments.
New Construction: The upfront cost of building a new home is higher depending on the type. Make sure your budget can accommodate additional expenses.
In that context, it is reasonable to assume that purchasing a house worth 100,000 dollars and sub-renting some rooms to meet some of your expenses is possible. Nonetheless, you need to:
Find a Loan Officer. These professionals can make recommendations based on your circumstances and even assist you in finding lenders who are prepared to accept your credit file.
Raise Credit Scores: It may be useful to identify ways of increasing your credit scores before applying for a mortgage for your home, as this can substantially affect the interest rates and loan terms.
Consider Affordable Housing: Invest in properties that you can afford and that meet your requirements. You should even consider those that offer room rental options.
Strategically and considering your financial position, you and your husband may be able to become homeowners.