Another DO I QUALIFY thread!

[Anonymous]

Hi all,

I've been mulling around the idea of trying to buy a home rather than continue to rent. Please look over what I've provided and give honest feedback.

Thanks

Income: $88k salary+ bonuses (cleared $95k last year with $85k salary)

Car payment: $900/mo

Apartment rent: $1800/mo

Credit cards: $100k+ available credit and about 10% utilization

Student loan: $32k debt ($210/mo)

401k: $20k

FICO8: 723/738/722

I'm a person that likes to live each day like it's my last so I don't really save at all. So FHA loan looks like the best idea. I have 10% CC debt showing but thats only because I use credit cards for every single transaction so I rack up points and free money from the card companies and tend to pay in full, or close to it each month. My 401k plan only allows me to borrow and pay back to myself at 4%, so I can't just withdraw money to put towards a mortgage, but I can borrow from it. I would much rather use the $1800/mo in apartment rent to put towards a home $250-300kish (Naples, FL high housing costs but minutes from work) or I move a bit further north (Fort Myers, FL) and save $50k on the home but make up a large portion of that in fuel to get to work and frustration with traffic.

let me know if more info is needed.

Thanks

[Anonymous]

I'm not a lender, so I can't answer the question regarding if you qualify. BUT, you need to look at your mortgage scores and not your FICO 08 scores when trying to buy a home. It may be helpful to know which loan you are interested in getting...VA?FHA?Conventional?

Have you received your bonus for more than 2 years? I think lenders won't accept bonus/commission/overtime pay unless you've received it for two years from the same employer. 

Your DTI does look low as well. Just an FYI, rental payments aren't factored into DTI since you won't be paying that rent while you have the mortgage. 

[NC_Mtg_Loaner]

your income appears healthy enough to support being approved for a 95% conventional loan if you wanted to put down the extra $ in order to obtain a loan where PMI eventually drops off naturally which is what I'd recommend to a buyer who was able to do so. 

[kc0039]

I suggest paying off those credit card balances and keep them at 0% until after closing. I used $10k for the CC debt and use 5% for the payment which gave me $500/mo in payment. I utilized 1% for the payment for your student loans.

Conventional loan - WIth your CC at 0% utilization. 5% down at $300,000 sale price (Only way you're going to qualify for this is by Freddie Mac conventional loan because some of Freddie Mac loans can go up to 50% debt to income. Ask your loan officer if he can run LP with a To Be Determined address). You'd qualify for this loan as long as you don't have any HOA, taxes aren't greater than $6,000 per year and insurance isn't above $1,440 per year

FHA loan - You'd qualify with 3.5% down and you don't need to pay off your CC.

[Anonymous]

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@Anonymous wrote:

I'm not a lender, so I can't answer the question regarding if you qualify. BUT, you need to look at your mortgage scores and not your FICO 08 scores when trying to buy a home. It may be helpful to know which loan you are interested in getting...VA?FHA?Conventional?

Have you received your bonus for more than 2 years? I think lenders won't accept bonus/commission/overtime pay unless you've received it for two years from the same employer. 

Your DTI does look low as well. Just an FYI, rental payments aren't factored into DTI since you won't be paying that rent while you have the mortgage. 

---

Yes, I've been with my employer about 3 years and have received quarterly and annual bonuses the entire time.

Mortgage scores

EQ 705

Trans 738

EX 690

[Anonymous]

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@kc0039 wrote:

I suggest paying off those credit card balances and keep them at 0% until after closing. I used $10k for the CC debt and use 5% for the payment which gave me $500/mo in payment. I utilized 1% for the payment for your student loans.

Conventional loan - WIth your CC at 0% utilization. 5% down at $300,000 sale price (Only way you're going to qualify for this is by Freddie Mac conventional loan because some of Freddie Mac loans can go up to 50% debt to income. Ask your loan officer if he can run LP with a To Be Determined address). You'd qualify for this loan as long as you don't have any HOA, taxes aren't greater than $6,000 per year and insurance isn't above $1,440 per year

FHA loan - You'd qualify with 3.5% down and you don't need to pay off your CC.

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I could pay off the CC pretty easily. I just use them as daily drivers rather than using my ATM/Debit card so I can get bonus miles and cash back from the credit card companies. The problem I will have is coming up with the downpayment as I don't know how it'll look to a bank if I borrow from my 401k because it'll be a monthly cost to pay that back as well as the potential mortgage.

[Anonymous]

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@Anonymous wrote:

Hi all,

I've been mulling around the idea of trying to buy a home rather than continue to rent. Please look over what I've provided and give honest feedback.

Thanks

Income: $88k salary+ bonuses (cleared $95k last year with $85k salary)

Car payment: $900/mo

Apartment rent: $1800/mo

Credit cards: $100k+ available credit and about 10% utilization

Student loan: $32k debt ($210/mo)

401k: $20k

FICO8: 723/738/722

I'm a person that likes to live each day like it's my last so I don't really save at all. So FHA loan looks like the best idea. I have 10% CC debt showing but thats only because I use credit cards for every single transaction so I rack up points and free money from the card companies and tend to pay in full, or close to it each month. My 401k plan only allows me to borrow and pay back to myself at 4%, so I can't just withdraw money to put towards a mortgage, but I can borrow from it. I would much rather use the $1800/mo in apartment rent to put towards a home $250-300kish (Naples, FL high housing costs but minutes from work) or I move a bit further north (Fort Myers, FL) and save $50k on the home but make up a large portion of that in fuel to get to work and frustration with traffic.

let me know if more info is needed.

Thanks

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I am not a lender but I will tell you that I was just approved with a very similar profile with 22% CC util. Just a bit more income and we close tomorrow. My mid mortgage score is 691. DTI was 45% and I am making payments to the IRS (for about a year now). I feel like you have an awesome chance. I also used some of my 401K for downpayment. I say go for it...good luck!! BTW I went FHA also......

[kc0039]

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@Anonymous wrote:

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@kc0039 wrote:

I suggest paying off those credit card balances and keep them at 0% until after closing. I used $10k for the CC debt and use 5% for the payment which gave me $500/mo in payment. I utilized 1% for the payment for your student loans.

Conventional loan - WIth your CC at 0% utilization. 5% down at $300,000 sale price (Only way you're going to qualify for this is by Freddie Mac conventional loan because some of Freddie Mac loans can go up to 50% debt to income. Ask your loan officer if he can run LP with a To Be Determined address). You'd qualify for this loan as long as you don't have any HOA, taxes aren't greater than $6,000 per year and insurance isn't above $1,440 per year

FHA loan - You'd qualify with 3.5% down and you don't need to pay off your CC.

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I could pay off the CC pretty easily. I just use them as daily drivers rather than using my ATM/Debit card so I can get bonus miles and cash back from the credit card companies. The problem I will have is coming up with the downpayment as I don't know how it'll look to a bank if I borrow from my 401k because it'll be a monthly cost to pay that back as well as the potential mortgage.

---

A lot of people do that. We don't calculate the loans from your 401K if you do liquidate it to put as a downpayment towards the house.

[VALoanMaster]

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@Anonymous wrote:

Hi all,

I've been mulling around the idea of trying to buy a home rather than continue to rent. Please look over what I've provided and give honest feedback.

Thanks

Income: $88k salary+ bonuses (cleared $95k last year with $85k salary)

Car payment: $900/mo

Apartment rent: $1800/mo

Credit cards: $100k+ available credit and about 10% utilization

Student loan: $32k debt ($210/mo)

401k: $20k

FICO8: 723/738/722

I'm a person that likes to live each day like it's my last so I don't really save at all. So FHA loan looks like the best idea. I have 10% CC debt showing but thats only because I use credit cards for every single transaction so I rack up points and free money from the card companies and tend to pay in full, or close to it each month. My 401k plan only allows me to borrow and pay back to myself at 4%, so I can't just withdraw money to put towards a mortgage, but I can borrow from it. I would much rather use the $1800/mo in apartment rent to put towards a home $250-300kish (Naples, FL high housing costs but minutes from work) or I move a bit further north (Fort Myers, FL) and save $50k on the home but make up a large portion of that in fuel to get to work and frustration with traffic.

let me know if more info is needed.

Thanks

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Hi Footloose301,

If your cards show zero balance/zero payment, that will increase your buying power by about $30,000 +/- so that's what I used.

I'm also going with the premise that FHA is the option because it's less money down & we wouldn't have to count the 401K loan payment in your debt to income ratios.

$340,000 purchase price with 3.5% down = $11,900 down with a loan amount of $333,842.

PI estimated at $1,546.07

Insurance estimated at $100

Taxes estimated at $300

FHA mortgage insurance $232.40

Total estimated payment of $2,178.47.

That would put your debt ratio at 44.845% which is well under the threshold for FHA.

If you want your monthly payment to be around what you're currently paying for rent you'll need to go down to say $300,000 for the purchase price with property taxes coming in at $200.00 per month to get a total estimated payment of $1,869.24.