Young and looking to buy

[Anonymous]

This forum has been very helpful but I would love to get some input from the experts. My wife and I are young and I'm just finishing up school. We're planning to start with a 6 month lease renting to build some income history before buying. Likely late 2013 will be when we want to purchase.

Age: Both of us are 23. No kids yet.

Location: Expensive DC/Virginia area.

Credit: My score is a 734 and my wife's is around 750. (According to a recent credit card we were approved for) Neither of us have any negative marks according to CreditKarma. Our history is about 5 years old each.

Income: I have a job lined up that will pay $65k and my wife will earn $20-$30k. (Both before taxes)

Debt: Surprisingly we're debt free including credit cards.

Assets/Reserves: We have a car worth $18k and an IRA with $30k but we don't plan to touch either. We're hoping to make a down payment of $10-$20k.

Loan Amount: We're hoping to get a loan of around $200,000 to buy something small because it's incredibly expensive over there.

Do we stand any chance of a loan this size at our age and income? What kind of monthly payment would we be making and about how large of a loan can we get? Over the summer I had an internship in the same area with an annualized salary of $53k and we had no trouble paying $1300 a month. In fact we came home with a large chunk of change. Based on some quick non-formal quotes it seems like the payments wouldn't be that much higher but I was hoping to hear from the experts. Thanks!

[JM-AM]

If your scores are FICO scores you qualify from a scoring aspect.

Have you been employed for 2 years same field? If not are you working in your field of study? This will be a question you are asked if not working for 2 years steadily in the same field of work. If you are working in your field of study or similar to your field of study then you are okay.

The amount of house 200K is fine and yes you qualify.

Depending on what rates and other factors are taxes, insurance, loan program etc etc... when you apply will play a part in the approximate price range. Guessing range between $1200-$1500

Your age has nothing to do with qualifying.

Your credit history is good.

Your income is good.

The only question is your employment?

[Anonymous]

Thanks for the quick response. I've spent the last two years working 20 hours a week in my field and as a fulltime student. Is part-time considered? Once I graduate I'll be working full time in the same field for about 6 months before applying for a loan. $1200-$1500 should be very doable for us. Again, thanks for getting back to me.

[MovingForward_2012]

+1, you and your wife could probably qualify for up to around $360K based on my personal experience. The monthly payment quoted for $200K is about right.

[MovingForward_2012]

Yep that employment history works.

[JM-AM]

You will be fine as mentioned in post above.

[Anonymous]

Thanks everyone. I'll be sure to keep reading and learning more about the process.

[MrChairman]

OP, my wife and I are roughly the same ages as you and your wife. I'm 25 ad shes 22. We're also in the DC metro area. Same salary ranges for both of us as well.creepy we have much in common. We signed a contract for new construction condo for 240k. We are going VA though so we don't require the hefty down payment. But I do feel your pain about being young and living in this area.

[Anonymous]

Age isn't an issue at all with positive credit scoring which you have and reliable income history. My friend just bought 180k house at 21 years old. As long as everything works out as expected with the new job it shouldn't be a problem.

One thing I noticed when I was preapproved was that when I had very little debt they were going to give me a crazy amount of money for a house. I think I made 65k when I bought the house they were gonna give me 275k. I wouldn't have even been able to finance a car later on. I would have been house broke. If they tell you they can give you 350+k make sure you take a close look at your budget(and future budget with kids or a car payment, investments, vacations) to find out what you can really afford not what the bank says they will give you. When you have no debt the bank will tell you that you can afford a LOT. With 90+k they may even tell you that you can afford 400k+.

[MovingForward_2012]

Yes. With my income of $96K, I qualified for up to $360K but I ended up purchasing at $347,900.

A lot of people are buying high to lock in the low interest rates. One member here mentioned that if you get a home with a DTI of 38-41% (maxed out) with an income of $100K, you still have more money left over than someone making $50K who doesn't have a mortgage. So take that into consideration as well. For example, my mortgage will cost $2300 per month but after taxes, I have $3100 left over for bills, and other things which is quite a bit as I bring in $5400 a month after taxes. My gross monthly is $8000 per month. And on this $347,900 home I will get back about $3,600 a year from the IRS every year from the interest paid on the loan so if I divide $3600 by 12 months, that is about $300 per month off the mortgage, so after a year, I will really be paying $2,000 a month...$500 more than my current rent. And this works very well for me since I don't have much debt and I don't have to pay for childcare as my husband is a stay at home Dad.