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CLOSED -- Clueless but I would like to buy a home - USDA Direct

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CLOSED -- Clueless but I would like to buy a home - USDA Direct

Timeline:

9/5/18 ~ Full application mailed to my local USDA office via USPS Priority.
9/6/18 ~ Application received by USDA office.

9/11/18 ~ Notification of EQ Mortgage Pull. Received an email from my rep to fill out 2 pages I missed plus to send a copy of my divorce decree. Sent and received acknowlegdement from the rep.

9/25/18 ~ USDA rep called me to tell me he could not approve my loan due to my income being "too low".

10/9/18 ~ Hired Certified Loan Packager to process my app

10/19/18 ~ Certified Packager completed my app and sent to FAHE for review. Packager suggested I pay off 2 cards and then re-submit.

 

12/11/18 ~ Resubmitted new loan app to Packager after paying off 2 cards

 

The packager took a very long time to complete my application. The government shut down (USDA offices closed) and he was still working on it. He finally finished it a week before the shutdown ended. The government is now open and he assured me he would send my app to FAHE tomorrow. I didn't realize FAHE was a government agency. I thought they were a non profit.

 

1/28/19 ~ Loan app sent to FAHE for approval.

2/6/19 ~ Loan app sent to USDA.

2/11/19 ~ USDA rep located my app and gave permissions for me to mail my money order for credit check. Money order mailed priority mail.

2/20/19 ~ Notice that my mortgage scores were pulled.

4/22/2019 ~ Received the COE via email.

5/10/2019 ~ Received Revised COE via email.

5/18/2019 ~ Under contract. Online Homebuyers course completed.

5/21/19 ~ Inspection Completed

5/26/19 ~ Seller agreed to all repairs in the Inspection report

6/7/2019 ~ Appraisal ordered by USDA

6/21/19 ~ Appraisal completed. Verified in person that seller repairs were completed.

6/26/19 ~ Signed and returned FUNDING COMMITMENT and NOTIFICATION OF LOAN CLOSING forms.

7/5/19 ~ USDA notifies closing attorney I am cleared to close ! Closing ste for 7/15 at 1 pm.

7/10/19 ~ Signed the Closing Disclosure form and wired closing costs ($155.01) to attorney.

7/15/19 ~ Closed !!! I actually got $40 back. 

My story:

Hello, I'm self employed and have a very low income. It is possible I will receive a lump sum in a few months (I don't know the exact amount but I can guesstimate around $20,000) and want to buy a house. I would also like to utilize the down payment assistance programs in my area. This will be my first home and I plan to live in it a long time.

My tax returns show income of $10k for 2016 and $11k for 2017. I also worked for a foreign company in 2017 it would bring 2017 income up to $17k. My deposits from work in April are $1552 and for May are $2010.

I live in the south so I feel I could find an affordable home for around $80k. I don't have any debt except my credit cards. No car loan. My student loans aren't reporting yet but when they do my payments will be 0.

My Fico 8 scores right now are EX 666, EQ 650, TU 648.

I would like to know if any mortgage company will preapprove me to buy a home with such a low income. I see the recommended process is to contact a loan officer but I was wondering if going to a site like lending tree would give me more offers to choose from ? Should I give it a shot with my CU or try a site like lending tree or quicken loans ?

I also plan to go to a home buying seminar. Thanks for helping.

BK7 Discharge 1/16
10/15 ~ EQ: 406; TU: 520
10/18 ~ EX: 666; TU: 646; EQ: 652
Message 1 of 122
121 REPLIES 121
Super Contributor

Re: Clueless but I would like to buy a home

The FIRST problem I see is DTI. 

 

If your 2017 tax returns show an income of 11K, your monthly income is $916 per month.

 

Staying under 43% DTI, means your mortgage payment (principal and interest, home insurance, real estate taxes, and primary mortgage insurance) would need to be less than $390.00 per month.

 

...and I don't think that you can buy a lot of house with that.



09/01/19 Fico 8: EX 721, EQ 723, TU 745.

Last inquiry 03 September 19

Zero percent financing is where the devil lives...
Message 2 of 122
Established Contributor

Re: Clueless but I would like to buy a home

I don't need a lot of house, though. One online claculator I checked stated if I buy a house at 80k and put 16k down at 4.5%, payments would be $325 per month.

BK7 Discharge 1/16
10/15 ~ EQ: 406; TU: 520
10/18 ~ EX: 666; TU: 646; EQ: 652
Message 3 of 122
Contributor

Re: Clueless but I would like to buy a home

I believe your figure is paying only principle and interest. It doesn't include PMI, taxes, etc. You'd actually be looking at $490 per month after it's all added up.

Message 4 of 122
Established Contributor

Re: Clueless but I would like to buy a home

So what do you guys suggest ? Just try one CU or go with a company that will submit to several different companies ?

BK7 Discharge 1/16
10/15 ~ EQ: 406; TU: 520
10/18 ~ EX: 666; TU: 646; EQ: 652
Message 5 of 122
Community Leader
Super Contributor

Re: Clueless but I would like to buy a home

You'll want to work with a loan officer who has experience working with self-employed clients.  If you are trying to utilize down payment assistance, then you should find the down payment assitance program you want to use and they will have a "preferred/approved lender list" which you can use to help make your decision.

Helping people with Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 6 of 122
Established Contributor

Re: Clueless but I would like to buy a home

I'm going to move forward with trying to buy a home and post my progress here. I hope this is helpful to anyone else with low income who wants to own a home.

 

There are 2 financing programs I am looking at: FHA and USDA.

 

I contacted my credit union (Navy) and asked them how do I get started. Initially they asked a few questions over the phone to prequalify me. I came back as prequalified for $102,000. That's more than I expected but is not proof of anything at this point. Still, I can't help but be excited. An FHA loan just means I can move anywhere I want.

 

The next step was to apply for preapproval. They said it takes up to 7 days to get an answer. So I applied for a $150k 30 year FHA loan with points to reduce my interest rate and monthly payment to around $620. I asked for more because the rep said they will counter anyways with what they think I can afford. There are several good down payment assistance programs in my areas that will cover my down payment and closing costs can be rolled into the loan if necessary. Today I submitted the requested docs (stubs from the past month, 1099s, tax returns from the past 2 years and non-Navy checking account statements for 2 months). They also pulled Equifax mortgage instantly and it cost $18 to do so. Now I just wait. 

 

For the USDA direct loan, I will work on that today. I live near Atlanta and I actually don't mind moving a little further out if I could get a really nice house. There is no down payment required. I can submit my app via email to the local Rural Development office. A friend of mine who works for a mortgage company told me a client got a beautiful home with a USDA loan in Covington. Covington is about 45 minutes from downtown and I've rented there before. It's about 20 minutes from shopping malls and the movie theater. Now I'm even more excited !

 

I read that if the USDA direct loan does not work out, to contact an approved USDA loan servicer and apply with them. USDA wants me to be 3 years out of bankruptcy and I'm 2.5 but I did read that if you had an illness that lead to the bankruptcy, that may be okay. I had 2 surgeries in 2015 so that's not hard to prove.

BK7 Discharge 1/16
10/15 ~ EQ: 406; TU: 520
10/18 ~ EX: 666; TU: 646; EQ: 652
Message 7 of 122
Established Contributor

Re: Clueless but I would like to buy a home

come back and let us know if you were approved im also in the process of buying a home and we are self employed its been a very slow process





Message 8 of 122
Established Contributor

Re: Clueless but I would like to buy a home

also i see you were in the atlanta area us too! near stone mountain/snellville





Message 9 of 122
Established Contributor

Re: Clueless but I would like to buy a home


@realestone wrote:

also i see you were in the atlanta area us too! near stone mountain/snellville


Cool ! I would really like to move to Snellville but it I think it's out of my affordability range unless it's a foreclosure. I'm not sure I want to deal with that. I rent in Decatur and can't wait to leave Dekalb. 

BK7 Discharge 1/16
10/15 ~ EQ: 406; TU: 520
10/18 ~ EX: 666; TU: 646; EQ: 652
Message 10 of 122
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