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Valued Member
Posts: 58
Registered: ‎06-26-2011
0

How much would I be approved for?

 

 

I will be purchasing my first home. I would like to know ideally what is a good fico

score to be approved for a very good fixed interest  rate?

 

Second question: How much will I be approved for with an annual income of $23,000

however my employer is about to give me a double pay increase soon and would I be able

to use that increase in income with my application for a mortgage?

 

The home I am interested in is roughly $150,000

 

Any help would be appreaciated..

 

Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
0

Re: How much would I be approved for?

Ideally you'd want to aim for a 740 credit score to have all of the options, and the best rates for all options.  However most people don't need all options, most people get really great interest rates with decent scores (640+).  

 

How much you can qualify for depends on more than just your income, see the link at the bottom for the remaining information that is needed.

 

What is the reason for the double pay increase?  Is your $23,000 salary or is it hourly?

 

Do I qualify for a mortgage? Info that is needed.

Valued Member
Posts: 58
Registered: ‎06-26-2011
0

Re: How much would I be approved for?

 

Thanks Shane for the great feedback.

 

My sister owns a trucking company and I have been working for her for 6 years

and never received a pay increase so she is going to be doubling my pay from

$9.00 per hour to $18.00 per hour and I usually work about 4 hours overtime each day.

 

The property I am interested in is a duplex so I am not sure if I can state on the application

I plan on renting out the other unit and there is additional income to support my mortgage.

 

My credit is above 640 however I have a couple bad marks which I am trying to

get removed so I can get my score over 700. No negatives within the last year.

 

I am interested in a property that cost roughly $180,000 so I am not sure

with my income increase and renting out the other unit to show my income

I will be able to qualify.

 

The only other debt I have is an auto loan for $33,000.. Thats about it.

 

Any feedback would be great. I would like to know if it is realistic to obtain

a mortgage for that amount.

 

 

 

 

Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
0

Re: How much would I be approved for?

Pay increases while working for family are always given extra scrutiny, as you are working for a family member.  If it wasn't tied to a promotion/increased job responsibility, and just a pay increase, particularly one that doubles your hourly rate of pay, then your income will likely be averaged rather than using the new pay rate x 40 hours a week, etc.  The way you have described it, I feel it'll more likely be averaged than accepting the new pay rate x 40 hours a week.  If it was a smaller raise, that you were regularly scheduled to receive, then 9 times out of 10 that rate x 40 hours a week could qualify, but to double the rate of pay just before qualifying for a home is a bit suspect.

 

If you can purchase the duplex with FHA financing (3.5% down payment), and if the other unit is rented at the time you purchase, you can actually use a portion of that income to help you qualify.  The region you are buying it determines how much, but most areas get to use 85% of the rental amount OR the net income amount calculated from a rental survey & operating income statement (parts of the appraisal).  But if there is no tenant in there, you don't get to use the rental income to qualify since there isn't actually any rental income.  You can put a renter in there contingent upon you purchasing the home, a rental agreement subject to, proof of security deposit and/or 1st months rent has been paid is required in that situation.  You can purchase the duplex with conforming financing as well and qualify in a similar manner (75% of the rental amount is the threshold) but with a 640 score you are going to need 20% down as there isn't any private mortgage insurance for it currently.

 

The payment on your $33k car loan is a bit more important than the amount owed on it, as the payment is what is included in your debt to income ratio.  But at $23k of income, without a tenant, and assuming a car payment of $300/mo, assuming very low taxes/insurance ($180/mo for both), that would put your debt ratio at 79% and would not qualify.  If there was a renter in there, and after the math was done it netted $850/mo in rental income (so say $1k/mo in rent), that would drop your total debt ratio to about 55%, and housing ratio to 44%, and that can qualify for FHA financing... barely... I've found 44.99% is the housing cutoff with automated underwriting, and 56.99% is the cutoff for total debt ratio.   Remember that is assuming low taxes, so yours may be higher and not even be able to qualify.  Or your car payment could be less, or more, +/- on the DTI, and there are a lot more variables.  You may want to look into a less expensive duplex, or look into a co-signer to help with more qualifying income, as obviously at double your current rate of pay your DTI would be at ~39% with the assumptions above and at least on paper you would definitely be able to afford it, so I'm sure the co-signer wouldn't need to contribute much if anything to the payments.  With an FHA loan, since it's assumable, as long as the servicer at the time permits assumptions, you could assume/remove the co-signer when you could fully qualify on your own with a longer history of being paid $18/hr.

Regular Contributor
Posts: 106
Registered: ‎10-16-2008
0

Re: How much would I be approved for?

Hmm, I bought my first home two years ago making $35k per year with 700 FICO score and only approved for about $105,000 so I am not sure if you can get the $150k.  Plus with your salary a $150k will be pretty tight.  I wish you the best though since your lender may be better than mine.

Established Contributor
Posts: 710
Registered: ‎01-10-2011
0

Re: How much would I be approved for?


FicoPower wrote:

Hmm, I bought my first home two years ago making $35k per year with 700 FICO score and only approved for about $105,000 so I am not sure if you can get the $150k.  Plus with your salary a $150k will be pretty tight.  I wish you the best though since your lender may be better than mine.



Not to side track this thread  but FicoPower did you have a lot of debt or ?  My income is about the same 36-37K and I was told I would be ok up to a high of  maybe 140K, and  lower 130's  no problem. Just had to fix my credit.

Freedom, Mariott ,CSP, SM, QS, BCE,, PSECU, DC Walmart. Maybe someday I will do that cool pic signature thing..
Valued Member
Posts: 58
Registered: ‎06-26-2011
0

Re: How much would I be approved for?

 

Thanks for the feedback shane. My debt each month based on all accounts layed out on

my credit file is about $560.00 per month. I am hoping to use the income I will generate

from renting out the duplex well the second house on the lot and I all ready have

a renter in place with the security deposit and first months rent and contract

ready to go.

 

Now I was wondering if going through a credit union would you be able to obtain

better rates?

 

Currently my fico score is around 670 and I am trying to push it above

700 across the board on all three CRA when I submit for pre approval.

 

Also I noticed someone posted on this forum about obtaining a fixed mortgage with

a 3.5 % down FHA and there scores are in the low 600's and there is shooting for

no money down.

 

Is there a possibility? I have heard that there are government programs that help you with

the down payment and even if the property needs to be fixed up if its a fixer they will loan

you money that is reasonable to fix your property. I am not sure if that is true so any

feedback pertaining to that would be appreciated.

 

I just want to make sure I have all my stuff in order so there is no delays

and want to see all the perks that come with a FHA.

Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
0

Re: How much would I be approved for?

Interest rates with most lenders are the same, you want to look for lenders who will approve your situation first and then compare the rates from those options.

 

Yes there are usually down payment assistance programs in most areas, you'll want to Google "down payment assistance" first time homebuyer "[your state]" "[your city]" "[your county]" without the [brackets] and you should get a pretty good list. 

 

Other links:

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/

http://www.hud.gov/local/ca/homeownership/buyingprgms.cfm (just replace the "ca" with your state's abbreviation)

Senior Contributor
Posts: 3,889
Registered: ‎05-24-2011
0

Re: How much would I be approved for?

Shane -- these homebuyer programs probably have an income limit?  Would it be fair to say if you don't qualify for USDA you make too much?

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Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
0

Re: How much would I be approved for?


Booner72 wrote:

Shane -- these homebuyer programs probably have an income limit?  Would it be fair to say if you don't qualify for USDA you make too much?


Nearly all of them, yes.  Each one of the programs usually has an eligibility chart somewhere within the program info, but in general it's no more than 80% of the HUD Average Median Income which you can find at http://www.huduser.org/portal/datasets/il/il11/index.html

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