Hello!
I make around $48,000/year at a regular W2 job that I’ve had for about a year and a half. My husband is self-employed and has a business that shows very little profit (under $5,000 the past 2 years). We have no debt whatsoever (no cc debt, no car payments and no student loans). My credit score is around 780 and my husband’s is in the same range.
We’re looking to purchase our first home. Truthfully at the moment we pay way too much on rent than we should, around $2,000/month (I hope I don’t get judgment, there are various complicated reasons for this…). The thing is… we have very little expenses and so we are able to afford this fairly comfortably, believe it or not. Although it may not have been the smartest move, we love the home we’re renting and haven’t felt the motivation to move into another rental.
Anyhow, I keep seeing that with our income we are going to be only approved for a relatively small PITI that results in a much smaller payment each month (around $900), which is fantastic… however the problem is that we live in a very expensive area of the US and would feel comfortable paying probably up to $1,500/month PITI which is what would allow us to get a single family home and not a condo. We have around $7,000 for a downpayment and are thinking of going the FHA route, might I add.
My question is… I know there’s the “payment shock” calculation that lenders sometime use, but does that ever factor in the other way? We’ve been paying $2k/month for rent for nearly 3 years and our landlord can vouch that we’ve always been on time, etc. Combined with our non-existent DTI ratio and high credit scores, do we think we have a shot at getting a 36%+ front end ratio mortgage?
Another question is would it be even worth it to have my husband factored into the mortgage since he makes such relatively low income (on paper)? I keep hearing how self-employment makes everything 10x more complicated.
