topic Can you still get a mortgage with little income to show for? in Mortgage Loans

Can you still get a mortgage with little income to show for?

Anonymous — Wed, 11 Jan 2017 19:47:00 GMT

What are the chances of getting a mortgage with low income but all other areas on your profile/report is great. Such as no debt as everything is paid off (auto and school loans) and the only thing left on your report are credit cards with low balances. Can having a big savings and excellent credit score offset the lack of income reqiurement when you are trying to get approved for a loan? What are other alterantives to getting a mortgage in this situation?

Re: Can you still get a mortgage with little income to show for?

DallasLoanGuy — Wed, 11 Jan 2017 20:02:02 GMT

self employed with lots of write offs?

or really no income?

Re: Can you still get a mortgage with little income to show for?

kc0039 — Wed, 11 Jan 2017 20:31:39 GMT

What do you mean by low income? Can you explain a bit further on those assets? There's a program that Fannie Mae has about having high assets that can be calculated as income.

Re: Can you still get a mortgage with little income to show for?

Anonymous — Wed, 11 Jan 2017 20:39:17 GMT

Lets say low income as in anywhere from 15k -30k yearly from a job. Excellent credit score, reports show perfect payment history for everything, auto loans paid as agreed as well as school loans paid off as agreed, credit card balance total utilization from 1%-9% at most. A big savings account enough to put a 20% down payment on a 200k property , lets say for example. Also, living with family and not having much living expenses so most of the pay can be towards the mortgage payment. It's just the income portion being so low as one of the requirments for a mortgage as the sole problem. Hope this clears it up more, sorry for the confusion. Any thoughts? Do lenders provide mortgages in this case?

Re: Can you still get a mortgage with little income to show for?

kc0039 — Wed, 11 Jan 2017 20:50:46 GMT

I'd go for a cheaper house. If you go FHA, you MIGHT be able to purchase a house if you have ZERO debt. If you make 30k a year, you have $1,375 in income lenders can use. Unfortunately, we have to show borrowers have the ability to repay a mortgage and income is a significant factor for mortgages.

Re: Can you still get a mortgage with little income to show for?

StartingOver10 — Thu, 12 Jan 2017 01:20:54 GMT

@Anonymous wrote:
Lets say low income as in anywhere from 15k -30k yearly from a job. Excellent credit score, reports show perfect payment history for everything, auto loans paid as agreed as well as school loans paid off as agreed, credit card balance total utilization from 1%-9% at most. A big savings account enough to put a 20% down payment on a 200k property , lets say for example. Also, living with family and not having much living expenses so most of the pay can be towards the mortgage payment. It's just the income portion being so low as one of the requirments for a mortgage as the sole problem. Hope this clears it up more, sorry for the confusion. Any thoughts? Do lenders provide mortgages in this case?

I am a little confused with the "living with family and not having expenses" part of your explanation above ^^^

Are you living with family now and not paying rent? If so, count on a "payment shock" calculation

Do you plan to buy a home and all of you move there - you and your family?

Are you familiar with the two ratios that are used to calculate your DTI - the housing ratio (this is your new housing payment including PITI + MIP + HOA, if applicable) - this ratio is also called the "front-end ratio". The front end ratio is limited to 46.99% (IIRC - could be 45.99%) of your gross income.

The second ratio is the total debt ratio (a/k/a back-end ratio) which is the housing payment referred to in the previous sentence + your debt payments (installment, revolving, and student loan payments).

For FHA the highest back end ratio allowed is 56.99% of your gross income (all sources of verifiable and allowable). Some lenders restrict that back end ratio to a lower amount (55% or even 50%) it is lender specific.

If you only have $30k total gross income per year, the maximum debt ratio allowed (by my lenders in this area of 56.99%) would be ~$1424/month. After you take out your current monthly debt payments what would be left? Does that amount support a $200k mortgage? Not in my area, but I don't know your area at all. The geographic area matters because the property taxes and homeowners insurance and potentially HOA expense would vary greatly. Remember, some lenders make the ratios more restrictive than FHA requires. They are allowed to make it more restrictive - not less.

Re: Can you still get a mortgage with little income to show for?

Anonymous — Thu, 12 Jan 2017 18:10:02 GMT

OK, you are all over the place, friend

You can say prefect payment history yada yada but this isn't a CC

A mortgage theoretically is a 30 YEAR contractual obligation... Where the ability to show at least RIGHT NOW the party as the means to afford a payment

You're jumping from 'possibly' 15k to perhaps 30k?
So maybe $600 but might be $300/wk in income to service a $160k mortgage (after the purposed 20% of a 200k purchase)

Yeah, right?
What's the real question?

Is it commission income, cash income, hard to document, drug money what?

Or are you seriously asking can a person making maybe $300/wk get a mortgage?

No real means of income, just a boatload of savings from an unknown source...

Yeah, I can see banks fighting to UW that loan

Re: Can you still get a mortgage with little income to show for?

Calidreaming — Thu, 12 Jan 2017 21:05:49 GMT

It's more crucial to have substantial, steady income than it is to have great credit and large savings. You might be able to qualify for a very inexpensive house, but I think you be much, much wiser to put that money you would have put toward mortgage payments and save a nice sized down payment. Then when you get your income up higher you'll be in a GREAT position to buy the house you really want. I think some people think that it's always better to own a home, but that is definitely not true. When you're young and just starting out I can't see why you'd really want or need to be tied down to a home.

Re: Can you still get a mortgage with little income to show for?

Revelate — Fri, 13 Jan 2017 17:05:51 GMT

20% down not so likely, that's a good downpayment in the current market but it's not a shock and awe one from a mortgage perspective.

Larger amounts, well if you can get under 70% or even 60% LTV your rate falls non-trivially even in Fannie land and I'm guessing you can likely find a non-traditional lender to do the deal since it's basically a no-risk loan for them even if you flake when the house can lose 30% of it's value and they still come out ahead if you even make one payment to the loan and that's at the 70% line. It's just statistics, during the subprime mortgage crisis homes fell on average like 30% and that's easily one of the worst housing events any one of us are going to see in our lifetimes, and they'd come out ahead even there call it half the time.

AFAIK 30% or higher has always been the gold standard for essentially just dropping a bag of cash on the table and writing your mortgage app on a cocktail napkin... not sure current market how many are still underwriting those loans, but there will be someone likely willing to play let's make a deal when we get into portfolio land.

I'd still go cheaper house though personally.

Re: Can you still get a mortgage with little income to show for?

blondy250 — Fri, 13 Jan 2017 18:03:17 GMT

I would hope not.

Re: Can you still get a mortgage with little income to show for?

StartingOver10 — Fri, 13 Jan 2017 18:05:59 GMT

^^^Yes, those loans are available. They are essentially collateral loans with a very high interest rate. We call them hard money loans. Lots of points + about 12% interest or more. These are individual deals where the investor sets the rate so you may find some at a slightly lower rate and some at a higher rate. Many times the loan may have a balloon payment due in a short time.

There is an in between type product too - a private loan with 25%+ down with a high rate of interest (9%+ is what I have seen).

IME the people that tend to use these type of loans are investors that buy an REO type property for "cash" (using one of these loans). The investor fixes up the house and sells it in a relatively short period of time to minimize the interest expense. I haven't seen individual borrowers use these loans for primary residences in quite a while.