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Profile picture for gsyl13

Will I be able to qualify?

I am 23 and looking to buy a home in the MA area. I was just wondering if I would be able to get a mortgage, and if so what mortgage would be best for me?

I am a first time homebuyer, looking to buy either a 2 or 3 family, in MA around 250,000. I have good credit, somewhere around 720 to 740ish. My income is low where my problem is, about 1200 a month, also I have been on the job over 3 years.
I have student loans and credit card debt that runs me about 300 a month. Also I have about 21,000 saved up for down payment and closing so far.

I most likly would not qualify on my own. My mother said she would co borrow or co sign for me if needed. Her problem is she has credit card debt, and no income at all, but excellent credit also. She also has money to cover the price of the house in the bank, and another 1/3 of the price of the house in stocks.

Would she be able to help me out? If so, would co borrowing or co signing be better?
  • August 31 2010 - Peabody
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Answers (17)

Profile picture for sunnyview
It sounds like you need a plan. A local lender could look at where you are and then give you a road map to get where you want to go. They know what the underwriters will want to see when you apply for a mortgage. A good lender may be able to give you a plan that you can work and then you can come back to them when you are ready to buy. 

Increasing your income will definitely help you qualify easier, but you also need to know how much of the potential rental income the mortgage company will allow when you apply. Hopefully, some of the lenders on Zillow will be able to give you some ideas.
  • September 30 2010
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Profile picture for gsyl13
I had worked a little more on the books last month. I earned about $2700, which is far more then the 1200 before.

I figured with income of 2 of the 3 units, I should be just over 4k a month.

Also, on the bad side my year to date income is low. But I was always planning if I had to work more to afford a house. That would be fine. And not to mention I make a lot more money with another job, and also from selling stuff on ebay. Which of course, they do not count.

What now?
  • September 30 2010
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Your best bet is to actually sit down with a mortgage person as they will qualify you and your Mom and advise accordingly.  It doesn't cost you anything and there is never any obligation to work with that mortgage person but at least you can see the parameters of a loan, qualification, type of home, etc.
  • September 04 2010
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Profile picture for shapiroamg
Approximately $4k/mo. this will vary depending on the number of units and your actual downpayment.
  • September 01 2010
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Profile picture for gsyl13
What do you reccomend my income be before taxes to qualify?

Thank You.
  • September 01 2010
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Profile picture for shapiroamg

your formula looks correct but we can only use 75% or so of the rental income to allow for vacancies. As soon as your pay increases we can use that immdiately.

  • September 01 2010
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Profile picture for gsyl13
Would I be able to qualify for a 3 family in the range of $250,000?

1200.00 Employment Income
1500.00 75% Rental Income 2 units

2700.00 Total
300.00   Fixed Expenses
2400.00

960.00 40% Income

Does that look right in anyway to anyone?

Does the 40% include all housing expenses, such as taxes homeowners, insureance? If so then I know 960.00 is way off.

What percentage of my income can I use for an FHA mortgage or one through MassHousing?

If I worked more how long would I have to work for the new amount to be qualified to use?

Thank You for your time.



  • August 31 2010
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Profile picture for shapiroamg

Your mother having no income does not help you. If she had income then it could be beneficial to you to have her on the loan. No income is no help.

  • August 31 2010
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Profile picture for gsyl13

The 1200 is before taxes, also a typical apartment in the area im looking would rent for 1000 to 1200 at least.

  • August 31 2010
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Profile picture for wetdawgs
I humbly suggest you would be putting your mother in a very difficult situation asking her to co-sign, something that one shouldn't do to ones they love.
  • August 31 2010
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Profile picture for shapiroamg
Rental income from the other unit(s) would be considered.

Lets go back to your income. Is the $1200 gross or net?
  • August 31 2010
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Profile picture for gsyl13

"Keep in mind that if you go the FHA  direction and want to bring your mom on as a non-occupant co borrower you will need at least 25% down due to the fact it is a multi-family home.  However now that I re-read your post it does notsound like she brings much to the table. "

She could be an occupant, would that help me out at all?

Im sure I will be able to afford the house, with out a doubt.

  • August 31 2010
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Profile picture for gsyl13
I can work more hours, but I do have another job but does not help me as I can not verify it.

My mother has the money to cover the house in full in the bank if I should default. And also about 30,000 in stocks. However she would not actually just gift me the funds, as I have a brother and sister and it would not be fair.

Also, would the rental income be considered?
  • August 31 2010
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Profile picture for Jenny78
 
  Right now with your monthly obligations, you budget for a little over $200/ month for a home. You have great credit and even though your mom does too, credit can't overcome budget. You will need to find a co-buyer with the income and good credit.

Hope this helps!

Jenn
  • August 31 2010
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Keep in mind that if you go the FHA  direction and want to bring your mom on as a non-occupant co borrower you will need at least 25% down due to the fact it is a multi-family home.  However now that I re-read your post it does notsound like she brings much to the table.
  • August 31 2010
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Profile picture for wetdawgs
Your mother would need an income to be able to be a useful co-signer.   Should she qualify as a cosigner, your mother should be fully aware that if at any time you are late to pay or don't pay, she is fully responsible for paying the loan and the loan will appear on her credit report as hers also.    Asking a loved one or a friend to cosign isn't something one does lightly.

You've done a great job of saving up a down payment. What steps are you taking to increase your income?   I suspect you are hoping the renters will pay enough to cover your portion of the property.   With current market rates, that may be tough.

You've got a good dream, don't worry about taking several years to get there.

 
  • August 31 2010
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Profile picture for shapiroamg
If your mom has no income, she will be of no value to you co-signing for a mortgage loan.

You will be able to get credit (or use of rental income) for the other units in the potential property you seek to purchase. The issue is that with your current income, you will not qualify for an amount that is close to what you seek in a purchase price range. What kind of work do you do now? Is there a chance for a bump in pay soon? Would your mom be willing to gift you funds to cover a larger down payment?
  • August 31 2010
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