Low income and very high DTI (before PITI) options?

[Anonymous]

With monthly income of $2340 (low income in my area in KY), monthly debts of $862, and very little money saved, I'm having trouble finding lenders with options for me.

USDA 502 Direct approved me for $42K, then denied me saying my approval was below their $60k minimum loan amount for 'adequate housing' (even though they said no min. loan amount when I was applying)! (By the way, I applied and got my USDA approval/denial mixture from start to finish in 38 days, so it ALMOST was awesome...) 

FICO is teetering right around 680. Not a veteran. Am a 1st time buyer.

$512 of the monthly debts is due to using 1% of student loans that are not in repayment (I was able to calculate a fixed fully-amortizing payment via studentloans.gov of $318, but my loan servicer doesn't provide an 'official letter' and so I understand no where will/could use that instead).

Are there any high-DTI mortgages available for my scenario, or any lenders that allow a non-occupant coborrow (father, with 3338/monthly and 515/mo debt offered for me) that would actually help my income/debt issue such as using a blended calculation (most lenders have told me they don't do this, and so a coborrow wouldn't help in my case where the credit isn't the problem).

Getting discouraged

[Anonymous]

Dose your area have any "First Time homeowners" programs? If you google, you may be surprised...our area gives 15k for certain zip codes and if you live within city limits another 7.5k on top of it. These can be used towards down payments (such as approved for 42k you now have 64.5k spending power or you use that as down payment and only mortgage 19.5k witch would make a huge difference on DTI ratio) or improvements, but they have caveat's of 10 yrs..in other words if you sell before 5 yr you owe back all and then it starts at 50% for yr 6 and goes down 10% each year after until year 10 then nothing. 

Good Luck!

[StartingOver10]

FHA has ratios that go much higher than USDA. The backend max ratio (if the lender has no overlays) is 56.99% of your gross income.  AND FHA will allow a non-occupant co-borrower and allow 100% gift funds.  The only thing you may run into is that some lenders have a loan minimum...

Not all mortgage lenders are the same, by any means. Is the income you mentioned your total gross monthly income for the household?

[Anonymous]

Thanks for the insights so far, I appreciate it! 

Yes, the income I mentioned is my household GMI.

I've been looking for any 1st time programs in my area, but so far haven't found anything except a few $5K assistance ones that unfortunately are only from lenders that have a 43% max DTI. I am definitely looking hard at FHA lenders, but so far haven't found any that go above 45% max. I'm glad that all FHA ones so far have allowed gift funds, but of 13 lenders so far only 2 allowed FHA non-occ borrowers (and said it wasn't blended ratios and wouldn't help me any).

I'll remain optimistic and keep searching and calling! 

[StartingOver10]

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@Anonymous wrote:

Thanks for the insights so far, I appreciate it! 

Yes, the income I mentioned is my household GMI.

I've been looking for any 1st time programs in my area, but so far haven't found anything except a few $5K assistance ones that unfortunately are only from lenders that have a 43% max DTI. I am definitely looking hard at FHA lenders, but so far haven't found any that go above 45% max. I'm glad that all FHA ones so far have allowed gift funds, but of 13 lenders so far only 2 allowed FHA non-occ borrowers (and said it wasn't blended ratios and wouldn't help me any).

I'll remain optimistic and keep searching and calling! 

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I will pm you two lenders that have higher ratios (up to the max) and allow non-occupant co-borrowers for FHA loans. Neither of these lenders have additional overlays over and above what the normal FHA guidelines allow AFAIK. They might have minimum loan amounts but I don't know what they are...you will need to call and ask. Each loan all over the continental US. I will pm you now

[Anonymous]

Do you mind telling us what state you are in?

[medicgrrl]

Are mortgage credit certificates still available?

[Anonymous]

@Joe_Bob I'm in Kentucky.
@StartingOver10 Thank you!

[Anonymous]

Have you considered where you will be if you GET the loan? Buying the house is one thing, maintaining is whole other ball game. Odds are shopping at the lower end of the spectrum is going to put more than a few items on the ol' to do list. If you are spending every penny to get into the house you're going to be in trouble when, not if, something happens. This can lead to ill advised loans and credit use which is the path to long term failure. It might be worth putting in the time and sure up your base line before making the investment. Just my 2 cents

[Anonymous]

@Dvasil - Indeed, I agree! In my case, the PITI and other monthly expenses (as well as maintanence on lower priced properties) is not an issue. I'm currently paying $700/mo rent for the past 2 years (far more than I'd qualify for), and I also have another $900/mo income, I just can't 'use' it as it is not taxable/earned (going on 5+ years recurring gift money from another parent, which is recurring for far longer than I'll need).

I'll also be looking at a much higher income within the next year or two (I'll complete my BS in Software Engineering during that time). I  have also had opportunity offers about double my current pay within the past couple months - I just can't take them due to current risks (startups, 'trial' period contingencies that I won't risk losing my current job without security, and a couple that are a different 'field' and so I don't want to lose my 2yrs+ at same employer or within the same employment 'field') until we're moved. Our lease expires in 4 months, and with what we need I can't afford to rent again, otherwise I'd stay put and wait it out (myself/spouse/3 year old/pets/and a large office requirement as I am a telecommuter).