Do I qualify?

[Strogen]

My friend and myself are tired of paying $1200 a month in rent. 

We found a foreclosed home for ~40K, it will need work but thats something we can handle. Home is in average shape (certainly safe and livable) , just in a rural low population location in NC. 

That being said our DTI's are acceptable considering every monthly obligation on our credit reports, including the minimum for credit cards. 

My DTI: 31% , his is similar. Both of us have mid 700's for FICO credit scores. Combined annual income is 78.5k. Both of our credit reports are crystal clean, besides, well, large debt levels. 

What banks will loan this little for a mortgage? Freeing up an extra $450 a month for myself would be a godsend for paying off this credit card debt. 

[StartingOver10]

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@Strogen wrote:

My friend and myself are tired of paying $1200 a month in rent. 

We found a foreclosed home for ~40K, it will need work but thats something we can handle. Home is in average shape (certainly safe and livable) , just in a rural low population location in NC. 

That being said our DTI's are acceptable considering every monthly obligation on our credit reports, including the minimum for credit cards. 

My DTI: 31% , his is similar. Both of us have mid 700's for FICO credit scores. Combined annual income is 78.5k. Both of our credit reports are crystal clean, besides, well, large debt levels. 

What banks will loan this little for a mortgage? Freeing up an extra $450 a month for myself would be a godsend for paying off this credit card debt. 

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I know that usually I say to stay away from banks, but this is an exception (very small mortgages).  Go to a regional bank in your area. See if they have the conventional 'homestyle renovation loan' which you may or may not need depending upon the condition of the house. Appraisers look at condition differently than you and I do. Things we think that are no big deal are required to be repaired/replaced prior to closing - unless you get a renovation type loan. 

One last comment: are you sure your DTI ratio is 31%?  That seems awfully high considering you don't have a mortgage yet.  Did you put your rent in for DTI calculations? If so, take it out.  At the 31% you are paying over $2000/month in debt. That doesn't sound right to me unless you have very high student loans. When the lender runs his calculations they will use your minimum monthly payment for your current debt + new housing payment. 

[Strogen]

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@StartingOver10 wrote:

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@Strogen wrote:

My friend and myself are tired of paying $1200 a month in rent. 

We found a foreclosed home for ~40K, it will need work but thats something we can handle. Home is in average shape (certainly safe and livable) , just in a rural low population location in NC. 

That being said our DTI's are acceptable considering every monthly obligation on our credit reports, including the minimum for credit cards. 

My DTI: 31% , his is similar. Both of us have mid 700's for FICO credit scores. Combined annual income is 78.5k. Both of our credit reports are crystal clean, besides, well, large debt levels. 

What banks will loan this little for a mortgage? Freeing up an extra $450 a month for myself would be a godsend for paying off this credit card debt. 

---

I know that usually I say to stay away from banks, but this is an exception (very small mortgages).  Go to a regional bank in your area. See if they have the conventional 'homestyle renovation loan' which you may or may not need depending upon the condition of the house. Appraisers look at condition differently than you and I do. Things we think that are no big deal are required to be repaired/replaced prior to closing - unless you get a renovation type loan. 

One last comment: are you sure your DTI ratio is 31%?  That seems awfully high considering you don't have a mortgage yet.  Did you put your rent in for DTI calculations? If so, take it out.  At the 31% you are paying over $2000/month in debt. That doesn't sound right to me unless you have very high student loans. When the lender runs his calculations they will use your minimum monthly payment for your current debt + new housing payment. 

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Sorry my income is 41.5K and my DTI is 31%, it would be lower but I pay $487 monthly to lendingclub, thats half way paid off thankfully. 

I meant to say mine and my friends DTI is about the same(30% him 31% me) that our combined income was 78.5K. 

We went to the house today and we found out why it was so cheap, extensive water damage. The realtor said quotes for repairs were 40K-70K. So its pretty much a no go unless it drops to ~20K and the repairs can be rolled into the loan. 

Thanks for the response though. 

[StartingOver10]

There are two renovation loans that I know of....(this means rolling repairs into the loan):

for conventional loans:  Homestyle Renovation Loan

for FHA loans:  203k loans

Having said that - water damage can be extremely expensive, a whole lot of unknowns.  If this is your first home, don't do one with extensive water damage. There are other f/c in this market. Check also sellers that are in probate or distressed sellers.  Sometimes homes end up being a good deal because they are just plain ugly and that is usually an easy fix (cosmetic)..  Get a good Realtor to show you the deals.