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Recent College Graduate - What are my chances for a loan approval?

I am a recent college graduate (May '12). I am thinking about buying a house and just want to know how realistic it is right now. Since graduation, I have been nannying but I am in the final stages of interviewing for a job within my degree field. The job would pay a salary around $35,000/year. If I do get the job, would the time I have been nannying post-graduation rule me out in terms of the standard 2-year employment?

Also, I would be receiving the down payment from my parents. I understand that doing this pretty much narrows my options down to an FHA loan - which is my preferred loan, anyway. 

I am looking to purchase a house for around $120,000. Is this unreasonable? 

I have a credit score of 730. I have $25,000+ in student loan debt (with payments of $215/month right now); and a car payment of $168 per month. Other than that, I have no bills. I have plugged the numbers into numerous mortgage approval estimators and most of them seem to give me the green light for the range of home prices I am looking in. However, I know those are pretty generic and aren't tailored to individual situations.

So essentially, I just want to know what my chances are for an FHA loan approval.

Also, when it comes to checking bank statements in the loan approval process - what would be considered a red flag? I deposited $4,800 in cash in February -- my boyfriend had been saving it for quite some time and he didn't want to spend it frivolously and since I handle all of the bills, he gave it to me to take care of/pay bills with/keep out of his hands. Would the cash deposit be a red flag?

Okay I know that is a lot of questions - I apologize! I am just wondering if I have too many situations going on (new job, past cash deposit) that would raise concern for a lender. I really, truly appreciate your help.

Thank you in advance!
  • March 07 2013 - Minneapolis
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Answers (11)

Profile picture for Ben Ganje
Interview a few lenders--you will want someone with honesty that is willing to tell you the good, the bad and the ugly.
  • November 25 2013
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  • October 25 2013
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Some great answers above! Another thing to think of is there are downpayment assistance options available that most of my first-time homebuyers take advantage of. 

It is awesome to see young professionals taking advantage of this market! 
  • October 17 2013
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Those are some well thought out questions!

From a lending perspective, the time you spent at college can be used in addition to your role as a nanny in our 2 years of employment history that is required. Don't worry about the nanny job not quite paying the same salary as your new prospective job. It is not difficult for us to show that you moved to the new occupation because it shows a positive gain in earnings.

I noticed you said you had decent credit, so FHA might not be the best way to go. Have you looked at USDA loans? What about the Fannie May 3% down conventional loans? Some of these may be much better fit for your financial future.


Let me know if you have any follow-up questions!
  • October 07 2013
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Profile picture for TeamBorden
If you need any great recommendations, let me know.  We work with 2 fantastic lenders who will give you honest advice about your qualification?  If you do not qualify today, they will let you know what you have to do to qualify for the future.
  • October 07 2013
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Profile picture for BellaItalia088
Hello, I am currently in a similar situation and I was wondering if you were able to qualify for a mortgage? I am going to be trying in the next month and was just wondering what to expect... Thank you :)
  • October 07 2013
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This is an exciting time for you!  And lots of good questions...

First, your time at college and your job as a nanny will all be used to develop a 24 month employment history.  There is nothing wrong with the nanny job.  That will simply be included as previous employment.

Truly, with your credit I would highly recommend looking at other options.  As of April 1st, FHA is changing the rule on mortgage insurance and making it a life-of-the-loan requirement.  In other words, unless you were to refinance later on, you will forever have monthly mortgage insurance on that loan regardless of your equity position in the loan.

There is a wonderful 3% down loan that does not require any mortgage insurance at all.  That in and of itself will save you a ton of money.

And you are correct on the bank statements.  That will indeed throw up a red flag.  But here is the good news.  Only 2 months of bank statements are required.  If you are buying a home soon, simply plan to submit the March and April statements.  Red flag is gone!  :)

Finally, based on the numbers you gave and an estimation on monthly homeowner's insurance and property taxes, you would be looking at a purchase price of approximately $150,000-$160,000.

Best wishes to you!

  • March 14 2013
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I agree with my Comrades and also use the rule of thumb 2.5x income for purchase price. 

But instead of writing a lengthy response I will just say that it all boils down to you working with a loan officer on getting pre-approved. For first time buyers this can sometimes seem like a scary process but it really isnt. Get someone on your team and the planning stage of buying becomes soooo much easier. 

I would suggest working with someone who enjoys first time buyers first off, but also is very knowledgeable about down payment programs. They are all over the place, and right now Wood-bury is the new biggest buzz with 25k potentially. Brooklyn Park has always had one of the best also. With your income there will be no problem, and may I dare say that the parents may not have to gift the money over to you after all?

I don't see why not. FHA in about a month is going to raise their PMI premiums I believe 10%, and it is also going around that they are making PMI permanent on the life of the loan, so you would have to refinance into conventional down the road. 

I have some buyers do 5% conventional no PMI with down payment assistance, and it seems to work really well compared to FHA. Just goes back to speaking with a loan officer that can run through some scenarios. 

Realtors and loan officers tend to go hand-in hand because us agents tend to have the best referrals. We work with lenders and buyers every day. Don't be afraid to check up on some realtors on Zillow and get in contact with one of us. It is somewhat of an unspoken rule that just starting out there are no contracts. As always, to me it is about building relationships and trust towards the beginning. 

Good Luck! ~Chris
  • March 07 2013
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Congratulations on your graduation!  You have done your homework on home buying as well.  My suggestion is to start working with am experienced Realtor and a seasoned mortgage professional now.  Together you can figure out your path to home ownership.  You are not far away.  You may also qualify for down payment assistance (there are several programs).  I am working with clients now who have from $9,000 to $15,000 in assistance programs to aid their home purchase.
  • March 07 2013
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You shouldn't have too much problem finding a loan if you wait a few months after getting the job (knock on wood).

What size of downpayment are you talking about?

The rule of thumb you hear most often about purchase price is for it to be 2.5X your income.  I personally am more comfortable with only double.
Going by those numbers a $125K loan would be a stretch on a $35k salary.  But thats not factoring in the amount you'd put down and whether or not your boyfriend would be paying as well.  I don't recommend two unrelated adults buying real estate, but thats beside the point.

Regarding the large deposit there shouldn't be too much concern over that since it was a one time transaction.  Bank would probably want a signed written statement describing the details.

  • March 07 2013
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Your in good shape if you get a job for what you went to school for. Dont worry about the Nanny thing. 2 months bank statements are used for seasoning so your March and April statement will show the avg balance and not the large deposit. Great questions, your asking the right ones.
  • March 07 2013
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