topic Re: Can I qualify? in Mortgage Loans

Can I qualify?

Anonymous — Fri, 27 Jan 2017 04:16:10 GMT

First time home buyer. Most of the loan programs for low income don't seem like they would work for me as I am looking to put down ~50% for down payment to keep monthly payments low. I have spoken to a LO at a major bank about my circumstances and their underwriter wants a year of paystubs of my part-time pay as I switched from salary 3 months ago, same company (detailed below). LO suggested looking into a portforlio mortgage at a local bank due to my large down-payment and reserves. Trying to get some input and advice as this is my first time looking at mortgages. Thanks for any feedback!

1. Mortgage Credit Scores:

EQ: 759 TU: 762 EX: 748

2. Credit Negatives:

Only revolving credit. 6 lines open. 6.5 year history.

3. Gross Income.

Gross income: $27,000

4. Source of income.

Hourly Employment.

5. Monthly debt payments.

No debt payments. Credit cards payed off every month.

6. Employment (for those who are employed).

Type of employment: W2 part-time. Volunatarily switched to part-time 3 months ago. Previously 4 years salaried.
How long 7.5 years same company

7. Assets/Reserves.

(Some investments would be liquidated for down payment)

Savings: 10k
Checking: 5k
401k: 60k
IRA: 35k
Stocks: 140k
Bonds: 9k
Gift : ~50k

8. Location:

Texas
South/southeast outside of Houston

9. Property Description:

Single family

10. Property Value.

Purchase transaction: 140-190k price range

11. Occupancy.

Primary residence

2 occupants. I plan to be only occupant on mortgage. Other occupant income: ~40k

12. Transaction Type.

Purchase

Re: Can I qualify?

ShanetheMortgageMan — Mon, 30 Jan 2017 22:32:23 GMT

If you've switched from full time to part time, but are with the same employer, then usually underwriters will average your earnings over the time you've been working part time. Your payroll/human resource department should be able to break that income down for the underwriters, or at least indicate to them when the official switch was made.

A $190k sales price with 50% down would be about the max that $27k/year of income could qualify for though (given Texas' high property tax rates).

Re: Can I qualify?

Anonymous — Tue, 31 Jan 2017 01:17:27 GMT

Thanks for the response! I have been struggling to find answers for my situation, being low income and having a considerable down payment with high credit scores.

190k is what I figured would be the max after checking online calculators. Thank you for the confirmation.

Any suggestions on where I should go in order to qualify for the mortgage? As I stated previously, the LO from a major US national bank said their underwriter wanted a year of "part-time" pay stubs and I am only 4 months into being part-time (looking to buy before a year). Is this mortgage better suited for a credit union or some other kind of lender?

Should I be asking the LO about different types of loan programs due to low income? For instance I may qualify for a conventional loan due to my credit score (750+) and down payment (50%), but my DTI would be high factoring in mortgage/property tax/insurance, plus recent change of employment status. Or I may qualify for something like the "Home Ready" mortgage program. I have low income and a SO (not married) that I could put their income down to help with DTI, but not have them on the mortgage. Are these things lenders try to steer you in the right direction?

Any other suggestions on what type of loans I should consider? Not even sure if I qualify for any first time home buyer loans that would benefit me even being low income, due to wanting to put a large % down and having cash assets.

Thanks for any feedback!

Re: Can I qualify?

DallasLoanGuy — Tue, 31 Jan 2017 21:43:21 GMT

that would fall under 'underwriter discretion' for me.

i dont have an outlet that says we can use income after whatever months.

i would submit your file to a lender who can send your file to underwriting BEFORE you go house shopping to be safe.

Re: Can I qualify?

ShanetheMortgageMan — Tue, 31 Jan 2017 22:53:23 GMT

Each lender will have a slightly different take on using part-time employment, it'll be something that can't be 100% guaranteed to use until an underwriter reviews and approves it. Large banks like Chase, Wells Fargo, BofA, etc. tend to be more conservative... so you may not have the best luck with them.

HomeReady won't allow non-borrower income to qualify, although it can be used as a compensating factor (see https://www.fanniemae.com/content/fact_sheet/homeready-extended-income-households.pdf) to approve debt ratios above 45% up to 50%. To use income to qualify, they'll need to be on the loan. Boarder income can qualify though, if you have a previous history of it from the same person who has been sharing your residence for at least 9 out of the past 12 months (see https://www.fanniemae.com/content/fact_sheet/homeready-boarder-accessory-unit-income.pdf). You can also have a non-occupant borrower (commonly called a co-signer) who will be on the mortgage but won't occupy the home (although that is a tall order to ask of someone), which would help add qualifying income.

Any loan officer you speak with should be trying to find solutions until all are exhausted.