Do I Qualify? Low Income, First Time

[Anonymous]

Alright, so I think I am finally prepared to step out and purchase my first home. I think I've been behaving prettty well, and I'll look pretty good to most lenders.

However, my husband has had a harder time finding work and has a lower FICO score than I do, and I'm not 100% sure it's a good idea to include him on the application if his score is lower, even if it increases our income above poverty levels.

Our current rent is $460 for a single basement room in someone else's crappy rental.

Avg 2 bedroom apartment rents in my area are $900-$1200

Situation 1: Apply by Myself

1. Credit: 700-725 FICO
2. Income: ~$28,800 gross income per year, about $24,000 take home - Single income
3. Source of income: Good old full time W2 employment, 2 years of consistent employment history
4. Monthly debt payments: $0-$75/mo, Credit card
5. Employment: W2, Full Time, 2 Years, HS Diploma
6. Assets/Reserves: $5000, Mostly in an index fund.
7. Location: Jefferson County, Colorado, or Zip 80004 and surrounding
8. Property:  2 bedroom Townhome or Condo with between 700-1200sq feet , probably built between 1950-2000, Livable conditions by FHA standards (my standards are lower, lol) 
9. Value: Between $80,000 and $120,000 - that's all I can afford, according to me.
10. Occupancy: Primary residence
11. Transaction Type: Purchase - First timer

OR

Situation 2: Apply Together

1. Credit: His: 600-650 FICO - Mine 700-725 FICO; Although I know they typically go off the lower score.
2. Income: ~$48,000 gross income per year between both of us
3. Source of income: Employment
4. Monthly debt payments: $50-$125/mo, Credit card
5. Employment: Him: ~1 Year, part time w2; Me: 2 years, ful time, w2
6. Assets/Reserves: $5000, Mostly in an index fund.. All mine.
7. Location: Jefferson County, Colorado, or Zip 80004 and surrounding
8. Property:  2 bedroom Townhome or Condo with between 700-1200sq feet , probably built between 1950-2000, Livable conditions by FHA standards (my standards are lower, lol) 
9. Value: Between $80,000 and $120,000 - that's all I can afford, according to me.
10. Occupancy: Primary residence
11. Transaction Type: Purchase - First timer

While I'm pretty confident that I qualify, my most major concern is how a lender might view my income. Even though it is stable, it's pretty low, and I'm afraid of asking for a loan just to be laughed at by a bank for being too poor. For those about to suggest cosigning with a parent - most of our parents are dead or in a different country, and the one remaining has a lower income than I do, and is in financial ruin. That's not really a leg I can lean on.

Ideas and suggestions? Has anyone ever been in a similar situation? How did you deal with it?

Thanks for answering, all who answer!

[justrock]

There are websites that will let you put in your income (gross, not net) and other debts and get an idea of how much you can be approved for.  Check it out and then go for a pre approval.  The bank will tell you how much you can borrow and then you can look at houses.  You work.  Don't be embarrassed because you don't make a lot of money.   Look for first time home buyer's grants in your area.  They will help with downpayment and closing costs.   I make a little over $40,000 and I was approved for $144,000 FHA. You should be able to get something in your price range.

[Anonymous]

That is good advice, not everyone can make 100K let alone 50-60K. I am in the same situation hoping to get approved via NFCU. Make about 35K a year with High 600's low 700's Fico! Wish you luck as I hope I can get all of mine finialized too!

THANKS!!!

[justrock]

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@Anonymous wrote:

That is good advice, not everyone can make 100K let alone 50-60K. I am in the same situation hoping to get approved via NFCU. Make about 35K a year with High 600's low 700's Fico! Wish you luck as I hope I can get all of mine finialized too!

THANKS!!!

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You are welcome.  It really helps if you don't have a lot of other debt.  I had 12 positive tradelines going (all between 2 and 3 years old) but I owe very little.  I think that's key if your income is not great.  

[Anonymous]

Justrock - Do you have any suggestions on the best ways to find lenders willing to help engage those down payment assistance programs? I've been reading around a little on them, and noticed that not all lenders support those programs. There are quite a few in my area, but I'm not clear on what all the steps are to get from where I am to qualifying for one of those programs. 

[justrock]

The program I was in was for New York State.   I participated throught the program itself.  Started off by going to a free seminar, and then the non profit that administers the  down payment assistance met with me and set up my savings plan through a local savings bank.  I paid into it for 12 months and then they matched my savings 4 to 1 (8,000 to my 2,000).  When my 12 months were up the non profit directed me to a specific loan officer at the same savings bank who specialized in the DPA program.  She walked me through the rest and I close on my home on 11/24.  There was an additioanl $10,000 grant I was eligible for if I purchased in a specific county but I ended up buying someplace else so I didn't get that.

I'm sure every program has there own procedures, amounts, and parameters.  

[kjel]

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@justrock wrote:

The program I was in was for New York State.   I participated throught the program itself.  Started off by going to a free seminar, and then the non profit that administers the  down payment assistance met with me and set up my savings plan through a local savings bank.  I paid into it for 12 months and then they matched my savings 4 to 1 (8,000 to my 2,000).  When my 12 months were up the non profit directed me to a specific loan officer at the same savings bank who specialized in the DPA program.  She walked me through the rest and I close on my home on 11/24.  There was an additioanl $10,000 grant I was eligible for if I purchased in a specific county but I ended up buying someplace else so I didn't get that.

I'm sure every program has there own procedures, amounts, and parameters.  

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Sounds like you participated in the Federal Home Loan Bank's First Home Club! I'm in North Jersey and we also are covered by that program.

Each region of the country has a Federal Home Loan Bank and most have the matched savings program although the amounts they offer as a match vary. The website to locate your regional Federal Home Loan Bank is http://www.fhlbanks.com/ (the list is at the top of the page).

Also many states have some sort of assistance to first time buyers through what's called a Housing Finance Agency. Visit this website to find your local HFA https://www.ncsha.org/housing-help.

[Anonymous]

Do pre-approvals count against you as a hard inquiry?