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Profile picture for kristinekstrom1

How much will i be approved for?

My boyfriend and I keep hearing different answers from different people. Some people say we can't get a home loan at all, and some say we're approved for up to 70k! We really don't want to look for houses until we know for sure we'll be approved. 

 Our problem lies in that what his boss actually pays him is not reflected on his pay stubs. The last two years he's been in school so his '07 and '08 tax returns say gross income of 10k. His boss gave him a raise so he works 30hours a week at 10.50/hr plus cash for side jobs. BUT his pay stubs say $9/hr and his boss hands him the difference in cash. Im a stay at home mom and recieve $220/mo. for the next 4 years, but my credit score is 524, damaged by some decisions in college.

On the plus side, my boyfriend's score is 750. He has no debt. His credit cards have limits of 2k each and no balance w/out a single late payment. We have seasoned funds in our bank account of 10k for the last 3 or 4 months. And he's been at his job for 4 years. 

Some advice would be great. An amount we could get on a loan would be better and a referral to a loan officer who can help us would be perfect!
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June 28 2009 - Phoenix
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Answers (8)

Best Answer
Kristine - Lenders are going to use the income that's documented. If your boyfriend is getting paid partly in cash, then that part can not be considered for mortgage qualification / approval purposes. If all that is documentedd is $9/hr for 30 hours a week, that's all that can be used. On the plus side, he has no other debt.

You won't be able to go on the mortgage because your credit scores are too low. Most lenders require you to have credit scores of at least 620 today. So your monthly income can not be considered in the mortgage qualfiication.

Lenders typicaly use a front end ratio of 31 on the front end. That means no more than 31% of your gross monthly income can be used towards housing including mortgage principal and interest payment, 1/12th of your annual property taxes, 1/12th of your annual homeowners insurance premiums, your monthly mortgage insurance premiums (if any), and, if applicable, homeowner's association dues.

To determine how much your boyfriend may qualify for, I have to make some assumptions: Property taxes are $900/yr, homeowner's insurance is $600/yr, you're putting 20% down (no mortgage insurance premiums), and there are no homeowner's association dues. I further assume a 30 year fixed rate mortgage at 5.5%.

Based on the information provided and on the assumptions, the maximum mortgage amount your boyfriend may qualify for is $42,745. With 20% down, the maximum purchase price will be $53,430. Hope this helps you.
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June 30 2009
Honestly the first thing anyone wanting to buy a house must do is go sit down with a lender.  I use a Mortgage Broker because they work for hundreds of lenders and just lay all your cards on the table and explain your situation to them.  Bank statements and tax returns are a must - they will show the balances and regular deposits.
I would be more concerned about your husbands boss and tax evasion.
This is the time to BUY so don't put it off, so see a lender and get pre-approved!  Good luck.
Fran
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July 03 2009
Kristine- it is hard for anyone to say how much you qualify for without seeing all the debt.  While your boyfriend has great credit, his debt ratio has to be in line.  You might qualify if all his debt was known and there are some banks that might take a verification of employment from his boss.  Was he ever in the service as he might be able to do a VA loan?  Or does he have someone in the family that would go on the loan with him as a non-occupant co-buyer?  There are ways to do it but it will take a little work on you and your boyfriends part. 
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June 29 2009
Profile picture for kristinekstrom1
I'm a little offended by 'wetdawgs'.

It is not his choice to be paid in cash, thats just how his employer chooses to pay him. we've asked that he put it on his pay stubs and take out tax but he is not willing.


The 'seasoned' funds are from a settlement I received a while back and we just haven't spent it. 



We dont know if we can do seller carry back. Im not sure how that works but we are looking at foreclosures and HUD homes. 



We had looked into stated income but banks are no longer doing that. We just really want to get into a house. We are paying 750 a month in rent and know we can have a lower mortgage payment. 
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June 28 2009
Profile picture for wetdawgs
Your boyfriend can only declare the income that he is showing on his tax forms.  If he is choosing to short report and avoid taxes, his punishment is that can't declare that income for the purpose of a loan either.

He will have to qualify on his declared income of $10k, which would mean he'd be eligible for about $30 k mortgage if you have no other debts.   The "seasoned" funds in the bank are also of concern.

While some suggest that a seller backed loan is a possibility, my humble opinion is that sellers are very shy loaning these days and will look at the same things that banks do for eligibility.


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June 28 2009
You can buy a seller carryback with 10% down. You don't need to have a credit score with a seller carryback or income. 
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June 28 2009
Profile picture for zag44
70k?? Geez, that wouldn't buy you a cardboard box out here in California!  I think you're grasping at straws sweetie. I doubt you could even get a car loan with reported income of only 10k.
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June 28 2009
Your husband would have to be on the loan by himself due to your credit score, and his income will most likely not qualify since it's neither reported nor appropriately taxed. The amount he does report may qualify for some loan but without knowing all of your debts it's impossible to say for how much.
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June 28 2009
 
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