Mortgage at 19/20 Years Old?

[Reincarnated]

Hey all.

A little background. I'm 19. I work full time, will have $40K saved up for a down payment by the end of 2015. My family rents in the Bay Area (particularly Daly City), and I just really want to help in buying a house. Both of my parents have bad credit scores because of bad decisions from the past. My mom has slightly better credit than my dad (around 600+). My credit on the other hand is excellent. I am in the high 700s, and have 2 AMEX cards backdating to 2002 which both help with AOOA.

Do you think that I can pull of helping with buying a house? Houses here are extremely expensive, averaging in the 700k range. Of course, I am not aiming that high and will at most settle for a house that is 500k or less. 

My parents both make about $23 an hour, which I believe combined with my income can definitely afford a house in the 500k range. 

Not only that, but if I am able to get a mortgage loan, it's definitely a possibility that I would want to lease the home to a family here. I know that rent here in the area is expensive, averaging 2k-3k for a house. That would definitely pay for mortgage. I wouldn't even mind adding money from my own pocket to fulfil the monthly mortgage payment.

How does this sound? Am I dreaming too hard? What I wanted was to use my credit score, but my parents' combined income to get approved for a mortgage loan.

P.S. My mother and I have a great loan with our local credit union on our 2012 car, with a balance of $16k. Our APR is 5.49%. Would our best bet be to try and ask for their mortgage assistance since we have an existing relationship already of perfect on-time payments? Also, is it best to start off with a 30 year or 15 year term in my situation? My parents have had their jobs for over 10 years, and they are under a union so there is little to no chance that their job is ever in danger. They are contracted. On the other hand, I work full time and will be making about $13 an hour at Trader Joe's.

Thank you for your time. 

[Anonymous]

I like a guy that thinks outside the box.

I see what you're tryin to do.  Help parents get in home.

Now here's a guy that says-" of course, I am not aiming that high and will at most settle for a house that is 500k or less."  I mean having to "settle" for a half million dollar house is a lot to ask of a guy LOL.

Lemme see if I follow ya.  You wanna float a mortgage in your name, and lease it out to your parents or family?  Or do you wanna put all of of y'all on the mortgage?  I'm thinking you and the best report from your parents.  I doubt if you're gonna have the income to fly a 350k or better mortgage.  But you're thinkin if you can get in the house, all three of y'alls income will make the day, and well it could.

But here's the caveat.  You're very young at 19.  For you, next month might as well be next year.  You're not looking at the long game. Your whole life is before you.  Now if you get your name on a 30 year mortage that is gonna follow you for a long time.  You're gonna meet a young lady one day, decide to make a life together, and do stuff like buy a house, and there you gonna be holding a 30 year mortgage.  Lets say they DO give a ya mortgage, and things change, you're gonna ask them to MOVE out?  I think its a moot point, cause I don't see anyone doing this mortgage, but your never know.

You don't wanna do this.  I appreciate you wanting to help your folks, do that with knowledge.  Help THEM get to where they wanna be, take what you learn here, and coach em up.

[Peter1142]

You would not be able to use your parents income to qualify without their credit qualifying. It also sounds as if your credit score is based on AU cards, which is an issue... sorry. Your desire to help is admirable, though.

[Reincarnated]

I appreciate all the input!

However, I feel that some are missing the idea.

The house is going to be owned by myself. The fact that my family is renting and paying for someone else's mortgage does not make sense. My parents do not want to own property. If everything falls into place, essentially, they will be paying my mortgage for me (of course I would pay for it as well to the best of my ability).

The idea is that my parents will transition from paying rent to paying for a property that was made possible because of my credit and down payment.

Thoughts?

[Revelate]

Actually I think they may have it right.

You can't claim projected rental income on a home; to my knowledge you can't claim rental income on a mortgage app until you've had said income for 2 years.

End of the day, we can't claim income for a mortgage from anyone who isn't actually on the mortgage.  You can do the joint app since I think the requirement is you all get to be one happy family under the roof (which is your goal for now anyway it sounds like) but you're stuck with having to navigate their scores... which isn't the end of the world, and may still get you said home in the current mortgage market.

[Reincarnated]

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@Revelate wrote:

Actually I think they may have it right.

You can't claim projected rental income on a home; to my knowledge you can't claim rental income on a mortgage app until you've had said income for 2 years.

End of the day, we can't claim income for a mortgage from anyone who isn't actually on the mortgage.  You can do the joint app since I think the requirement is you all get to be one happy family under the roof (which is your goal for now anyway it sounds like) but you're stuck with having to navigate their scores... which isn't the end of the world, and may still get you said home in the current mortgage market.

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Sounds like lots of wonderful information and I thank you for your post. 

Would you just be able to rephrase that to be more beginner-friendly? Are you speaking of taxes?

[Revelate]

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@Reincarnated wrote:

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@Revelate wrote:

Actually I think they may have it right.

You can't claim projected rental income on a home; to my knowledge you can't claim rental income on a mortgage app until you've had said income for 2 years.

End of the day, we can't claim income for a mortgage from anyone who isn't actually on the mortgage.  You can do the joint app since I think the requirement is you all get to be one happy family under the roof (which is your goal for now anyway it sounds like) but you're stuck with having to navigate their scores... which isn't the end of the world, and may still get you said home in the current mortgage market.

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Sounds like lots of wonderful information and I thank you for your post. 

Would you just be able to rephrase that to be more beginner-friendly? Are you speaking of taxes?

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Taxes don't factor into this, just talking what you can put down on a mortgage application as qualifying income.

Basically it boils down to this: you can't use your parents income on the mortgage unless they are applying with you.

[Peter1142]

Unless your parents apply with you, sign their responsibility, and have their credit pass underwriting standards, their income is not considered reliable to pay the loan, and can not be considered for qualifying for today's mortgage. Similarly, you can not base the ability to repay on future rental income (unless there is already a proven history of rental income, i.e. a refinance)... they do not consider this reliable.

Generally the only income that can be used for qualifying for a mortgage loan is income that is earned by an applicant who meets credit qualification criteria, that is reported on their taxes, and is considered stable and dependable income (i.e. history of 2 years earning this income in this field.)

They have gotten very strict about these ability to repay rules after the mortgage crisis... it's not like applying for a credit card, your earnings ability is put under a microscope.