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First Time Homebuyer Questions

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Anonymous
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First Time Homebuyer Questions

Hello Everybody, I just have a few questions regarding purchasing a home for the very first time. Forgive me if I ask stupid questions, as this is fairly new to me. I will start off with giving you a little background. My wife and I recently got married in November. I finished school in July and began my new career in September in the healthcare field, which is very stable. I currently make $51k a year working full time at a hospital, but next month I will work a 2nd job part time that will bring in roughly another $1k monthly. My Equifax Fico is currently 658, however that does not take in account the big chunk of revolving CC debt I just paid down. According to the score simulator on score watch, which I understand is not accurate, it states my score should be around 701-720. My wife does not have good credit and will probably hurt me to be on the loan so I will more than likely attempt to apply alone. My DTI currently is about 16% accounting for payments for car, CC's, and student loan. We have approx $6k in the bank as savings for down payment, but will be hoping to use a down payment assistance program that Nevada offers here, which based on requirements, I would qualify for. 

 

So my question is, I want to attempt to get a pre-approval next month or so after credit bureaus receive my decreased balances, but I'm worried that I may not be able to get enough for the house we are looking at. It is a new construction and would be around 205k or less after down payment. A payment on that amount I believe would put my back end DTI ratio somewhere between 45-50% and that is with only my full time employment listed. Now with FHA loans, do I have a chance to get a pre-approval? I have read that some big named lenders have approved in upwards of 55% back end DTI. I realize that takes in account credit scores, down payment, reserves, etc.  Also, do they have contingencies prior to closing based on increased income because by the time of closing I will have had at least 2 months of secondary employment that will tremendously decrease my back end DTI. Sorry for the long post. Just looking for some guidance before we dive into this. Thanks everybody!

Message 1 of 5
4 REPLIES 4
JonRun
Regular Contributor

Re: First Time Homebuyer Questions

The lender I went through said they would go up to 57% DTI. She also started off averaging my last 2 W2's then adjusted my income to include the overtime I've made recently. My DTI was only about 30% but she wanted to have my income higher because my wife is a non-borrowing spouse so her debt would count toward our DTI.
Message 2 of 5
MovingForward_2012
Valued Contributor

Re: First Time Homebuyer Questions

It a bummer that you haven't already been working the part time job. With the extra $1,000 per month in income, you can afford about $252K max so $205K would be definitely doable. I'm not sure if you plan to start the new job before you apply? If so, they may be able to factor the extra income in somehow? Perhaps one of our experts know the answer to this question.

I'm concerned about your preapproval odds on solely your full time income with your wife's debts included. What are your wife's scores? Does she have any CC debt that could be paid down and/or collections that might be able to be PFD'd or GW'd? Could you add her as an AU on your credit cards? What is your timeframe for buying?
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 3 of 5
Anonymous
Not applicable

Re: First Time Homebuyer Questions

Yeah, that extra $1k would help tremendously. I had not even given the thought that Nevada is a community partnership state and that my wife's debt would be included in my DTI. That could be the deal breaker at the moment. I do have cards that I can add her to, however what is really hurting her is having too many CC's opened. They are all small limit cards, so we may have to hold off until we clear some of her debt up. We were looking to purchase around June/July, however if we were to build new for a June completion date, they still require a pre-approval now along with ernest deposit. We have a family member who is a realtor and knows a few mortgage brokers, so I will find out through him if he can ask what our options are. Otherwise, I will use that extra income I will be receiving to pay down her debt first and then look for something at a later time. Starting off in an apartment might just be the best option for us at this time.

Message 4 of 5
MovingForward_2012
Valued Contributor

Re: First Time Homebuyer Questions

But like I said, if you can start working the part time job and show a couple of paystubs with the added income, that might be sufficient for the added income to be factored into the DTI. But I don't know if there is a specified length of time that you have to bring in that added income for it to be counted.

I wouldn't give up just yet. I would talk to a Broker fairly soon regarding the added income you plan to bring in.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
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