Looking to puchase a home

[wisecredit]

1. I will be a first time home buyer
2. current credit score eq702 trans715 exp700(pa cu
3. I am union constrution worker 17yrs I get work out of my union hall 2009 W2 $39000 W2 2010 $40000 these annual salary inclued  uemployment checks work is seasonal

• Assets and reserve $40000
• Location Phila Pa
• Multi unit 3 to 4 units will be primary resident
• $120000 loan  I"m looking for a 203k loan

 Thanks in advance I need to here from the fico community what my chance of being aprove or pre aprove

[203bravo]

would really depend on your DTI ratio.. but seems in order assuming the 120k is for both the mortgage and the rehab projects.

[wisecredit]

my debt to ratio is%40 will be %20 with in 2mos Iam being carful want learn all I can about about the home buying process.

[ShanetheMortgageMan]

If you can reduce your total consumer debt payments to $666/mo (which is 20% of $40k/year), then on a $120k loan amount your total DTI would be ~50% (housing portion 30%) and that is a bit on the high side... however if there are renters in any of the other non-owner occupied units, then the lower of the figures from a rental survey & operating income statement (done by the appraiser) or 85% of the current rental agreement can be used to help you qualify, and so if you have 1 other unit rented at $350/mo then if that figure is lower than the appraiser's RS & OIS then you get another $297/mo of qualifying income, etc.  The more units that have renters the merrier, but if they are all occupied you'll need to have the unit you'll be occupying end their lease in writing.

The trick is to find a 203k lender who lends to a first time homebuyer on a 3-4 unit property - they are out there but I know of a few lenders who prohibit first time homebuyers on that exact combination of a 3-4 unit & 203k loan (it's a common lender overlay, but not an FHA requirement obviously).  Also keep in mind that there is a "self-sufficiency" test with 3-4 unit property & FHA financing which states the total housing payment (mortgage, taxes, insurance, HOA) can't be anymore than the total rental income (per the RS & OIS) of all units (even the one you'll be occupying).  So with 3.5% down if the total payment is $1,100/mo and the RS/OIS show the total rental income is $1085, you'll need to put a little bit more in order for them to be inline.  You also need to show 3 months PITI reserves for 3-4 unit properties with FHA financing.

[wisecredit]

Thanks shane

what the chances do I have of being aprove or preaprove with my

1. current credit score eq702 trans715 exp700(pa cu) and do they have preaproval 203k
2. Like I said in post my debt to ratio will be down to %20 or less in 2 mos
3. I"m taking my time learn the home buying process plus my work is seasonal I do have to be working at closing right ?

 thanks in advance

[203bravo]

If the other 3 units are going to be rehabbed as well then the work will have to be started with in 30 days of the loan and completed with in 6 months - will those unit be empty during that time frame thus not generating income?

And a contingency reserve must also be established that may up to 20% of the project costs - so that's cash that must be on hand in addition to the down payment and closing costs.

Just some thoughts.

[ShanetheMortgageMan]

I feel I just answered that question - was there something specific you had additional questions pertaining?  Or something I am missing from your question that I haven't covered?  Your chances could be 0-100%, depending on the variables I mentioned above.  If you have questions about any of that information please let me know.

[wisecredit]

Thanks shane after reading more careful  you did answer  my question 

[wisecredit]

Thanks 203bravo do you work in the loan office business i"am leaning about the home buying process thanks for  your advice you will be hearing from me from time to time