So my wife and I are getting ready to start looking for new home, and we also just found out we are expecting our first child! Our plan going into the new home purchase was to budget on just my income, as we aren’t sure what my wife will want to do work-wise after the baby comes. We are looking at homes in $225-250k range, put down 10%, conventional loan, estimate payment to be around $1700/mo. We both have excellent credit (not sure on mortgage scores but my CC-provided FICOs are 815, hers are 790) and fairly low DTI currently. Here are some of the specifics:
Me — Income $90k, mortgage in my name only $1100/mo (owe $135k, valued $165-170k), no car payment, CCs are PIF each month, total min payments would be about $50, no additional outstanding debts.
Her — Income $35k, car lease in her name only $275/mo, student loans in her name only $275/mo (about $16k balance), CCs are PIF each month, total min payments would also be about $50, no additional outstanding debts.
If we apply only in my name, will they only use debts in my name to calculate DTI? Or the entire debts of the household? Here’s DTIs I have calculated using the estimated $1700/mo new mortgage (check my work?):
My income, my debts, $1750/$7500 = 23% DTI
My income, all debts, $2350/$7500 = 31% DTI
Both incomes, all debts, $2350/$10400 = 23% DTI
At these DTIs will it make any difference how we apply? I know if we include my wife’s income we would probably be approved for a bigger mortgage, but if we don’t plan on needing/using it is there any benefit? Any downsides to doing one way over the other?
Thanks in advance for any insight!
If credit and DTI is in line it doesn't really matter.
For a conventional loan, you can go in by yourself and depending on your state she may have to sign a quitclaim deed. We are going to be doing similar and going conventional to just go by my husband's income/debt.
Keep us posted on your purchasing journey!
Thanks for the replies all. We live in MI currently and that is also where the new home will be. Google says it's not a community property state.
Wife is currently employed, and the goal is to move before the baby arrives (April 2020). I guess a lot depends on our ability to sell our current home, but the market activity in our neighborhood has been encouraging with most homes selling inside of a month.
That is another area I have a lot of questions about. I've heard about buying/selling on contingency, which is what we'd have to do I guess? When I bought our current home I was in an apartment, so I just paid the fee to break my lease and chalked it up as an expense of buying the house. Had a several week overlap to get moved, which we probably won't have this time around. I assume it's better to be under contract for the sale of our current home before we make an offer on new home? I've also heard people mention the term "bridge loan" in these situations, but not sure what that really means.