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Can a full-time doctoral (grad) student buy a 1st home? Am I considered low-income?

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I will be a full-time doctoral student in graduate school and would like to buy my first home. Will a mortgage company give me a loan? Will I be considered low-income? I have excellent credit (>800) and 10-15% saved for a down payment. How does full-time school status affect abilities to be qualified for a mortgage?

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June 17 - Philadelphia

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Eric142
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Eric142

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Why on earth buy a house while doing a doctoral program? I have my Ph.D. (engineering) and there is no way on earth I would have had the time and energy to care for a house while in grad school, let alone the money aspects. I made good money as a doctoral candidate and I'm sorry but $15-25k per year does not make for a well financed buyer, even with the savings you seem to have.

Also, what will you do when you finish in 3-6 years? You will almost certainly have to move to another city for work/post-doc/faculty position.

Take some advice from someone who has walked the Ph.D. path, find a good rental near your new office/lab and leave some room in your budget to take an evening off once a week and at least a couple weeks away from school a year. You will be in a much better position, financially and emotionally, to buy after you get called Doctor.

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August 15

Pasadenan
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If you are buying a "subsidized house", or will be getting a government subsidy to buy a house... be aware, that many times limitations are placed on what you can sell it for, or what income bracket it can be sold to, or a requirement to give the deferential in selling price when you sell to a government agency.

In this economy, it may not matter, but you really do need to run the numbers first, or you may find that "low income housing" is costing you more in the long run than non-subsidized housing.

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August 15

wetdawgs
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Thomas Meyers: Please read the Zillow post about spam and self promotion. Your posts are being flagged left and right.

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August 15

Thomas Myers, "T.myers1"
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Thomas Myers, "T.myers1"

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Call me I will walk you through this process. It is easier to answer your questions over the phone then typing back and forth.

Sincerely,
Tom

[content removed by moderator for being self promotional]

*Note - If you are working with an agent disregard this offer.

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August 15

soonah
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soonah

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Read this article on the IRS website, and take this credit, it sounds like this is your first home, so yes, no matter your income it looks like you are a first time buyer. If you have a reserve in the bank for a year of payments, you likely will qualify for a loan, talk to the bank. You posted this June 17th, hope you have found something and are living in your first home by now. Congratulations on your venture now or later.

http://www.irs.gov/newsro ... 2,00.htmlhttp://www.irs.gov/newsroom/article/0,,id=204672,00.html

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August 13

kanzus
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A lender will qualify you if you can demonstrate 2 years of employment, even if it is part-time teaching, part-time research/library assistant, or a mixture of both with your school. You need to look into down payment assistance from your state's housing program for low-income residents. You may be required to attend a home buying class that offers credit and budget counseling. It is worth it for the educational value and being current with your local real estate economy. Do not enter the home buying process without being educated. Too much is at stake to wreck yourself financially.

Now, for the pre-approval, here is the tricky part. Lenders look at debt to income ratio. If you pay off your credit cards every month, submit a letter to your lender stating that you carry zero debt and that you use your credit card as a convenience, paying it off every month. It is still important to use your credit card to keep a responsible trail of evidence. This letter of explanation is very important because the lender/underwriter is quick to stamp "deny" because they are operating in a risk averse environment. You need to account for any oddities on your credit report such as if your debt to income ratio looks high. As a graduate student, your "debt" will likely "appear" high relative to your income because your income is low, though the credit report does not tell the whole story . . . that you pay it off when the statement arrives every month.

Now, US Bank has an American Dream special loan program available to teachers, police, fire fighters, nurses, etc. (those in the helping/service fields that make low incomes) that requires only 3% down payment and will not charge PMI (this is mortgage insurance, the extra fee you pay every month as a penalty for not putting 20% down in the first place). Even if you have a good amount of money saved for a down payment, you may be at risk of losing it all because home prices are going down in many areas. You want to avoid being underwater . . . owe more on the loan than what your house is worth. You need to see if this fits your situation. If your area is stable or "safe", then you may want to put more down for the down payment. If your area is not stable, go with a minimal down with help from your state's down payment assistance program. You may want to choose the latter option so that you have more cash stashed away . . . safe and accessible in a bank in case an emergency should happen.

All the good to you!

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August 13

Tiffany Bond, "TiffanyBond"
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Tiffany Bond, "TiffanyBond"

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It depends on what you want to buy. I bought my west philly row for $40k. The mortgage payment was far less than market rent (<$400/mo), so I had no problems getting financing. I *think* lenders consider the profession in which you are getting your degree (for example, I am getting a law degree - so I doubt they blinked when I said I needed a 40k loan...but maybe if my grad degree had been in something low paying, like say underwater basket-weaving, there may have been an issue).

I know a few decent lenders in the area if you want to email me off-board.

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August 13

wetdawgs
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The biggest thing that affects your ability to have a mortgage at this stage is an income. When we went to graduate school, income was sporadic - TA one term, none the next, research grant for a while.... lenders like it to be more steady. Perhaps you are luckier than we were!

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June 17

Tap012
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Tap012

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If you have a bachelors degree, you don't need 2 years of job history. I qualified after working for a little more than a year. However, you do need a job, which you don't have so no you won't qualify for a loan.

I don't think they'll let you pay for your mortgage with your private student loans.