Home Mortgage - How much can qualify for?

[Anonymous]

Hello,

I would like to purchase a home within the next year but I am a little concerned about how much I am likely to qualify for and also the down payment. I do not have any assets (retirement, investments, properties, etc) I have about 3k saved to use towards my purchase but I am really hoping I can qualify for some type of 1st Time Homeowner program/assistance.

To give you a little insight:

My Fico Scores

TU - 713

EXP - 714

EQ - 700

Income

Annual  - $56k

Monthly Court Ordered CS Recieved - $630

Debt

Car Loan - $11,800; $385 paid monthly

Student Loan - $12,000; $90 paid monthly

I have other monthly debt (car insurance, rent, utilities, cell bill, etc. but i dont think that's taken into consideration when applying for a mortgage)

Revolving Credit (all of the accounts below currently have a $0 balance)

Credit Card w/ $2,500 limit 

LOC w/ my Credit Union - $1,000

Credit Card w/ $800 limit

Credit Card w/ $300 limit

[Anonymous]

The Quicken calculator says about 300k

income 63,500 salary and child support

car deb-t 385 month

student loan- 90

Credit card-0

APR was 3.6 @ 30 years

Credit scores are good.  May be a little hard to qualify for assistance with a 63,500 salary.

[Anonymous]

Thanks.

I've used a couple of online calculators as well (bankrate and wells fargo) and they both put me at about 260k. Not sure how accurate the online calculators are though so I wanted to raise the question here.

Will I need a bigger down payment?

[StartingOver10]

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@Anonymous wrote:

Thanks.

I've used a couple of online calculators as well (bankrate and wells fargo) and they both put me at about 260k. Not sure how accurate the online calculators are though so I wanted to raise the question here.

Will I need a bigger down payment?

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The down payment depends upon the type of loan you select: FHA requires 3.5% down (min) and you can get a conventional loan for 5% down (min).

I don't know where you are geographically, you might want to see if you qualify for a USDA loan, but there are income limitations.

Most down payment assistant programs also have income limitations based on the number of people in the household and the total HH income.

[compassion101]

Don't forget cloaing costs that you'll have to come up with. Even just 3.5% down if your talking ~300k house gonna need 15-20k. Can you cut out some expenses and save more money? The income with child support seems like you could be able to save a bit if you cut some things out. Good luck!

[Anonymous]

Thanks everyone.

I definitively don't live beyond my means.

To be honest I don't have many expenses but the expense that I do have are all out of necessity ( car note, car insurance, rent, food, utilities, life insurance)

Im just tired of renting - I'll figure out something!

[StartingOver10]

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@Anonymous wrote:

Thanks everyone.

I definitively don't live beyond my means.

To be honest I don't have many expenses but the expense that I do have are all out of necessity ( car note, car insurance, rent, food, utilities, life insurance)

Im just tired of renting - I'll figure out something!

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Depending upon your market you may be able to negotiate a seller contribution in the contract to pay your closing costs and pre-paid expenses. If you get an FHA loan the max seller contribution is 6%, but you really rarely need that much.  4% is more typical. If you go with a conventional loan, the maximum contribution is 3%.

For down payment, you can get a gift from a relative if that is an avenue available to you. Or google "downpayment assistance + your county and state" to see what is available.  If you are in a high cost area, your income may qualify.

[Anonymous]

I will kindly have to disagree that you should buy a house or condo.

Here's why:   You said the following.

" I do not have any assets (retirement, investments, properties, etc) I have about 3k saved to use towards my purchase "

As a homeowner or even condo owner you are responsible for all repairs in the house (or condo). Air conditioning, heating systems,  major appliances, roof, lawn maintenance, trees if large may need to be trimmed per city ordinances...this costs approx. $400 to $1000,.

Your new expenses depending where you live in the country will be water, trash pick-up, property taxes, school district taxes.

You should have at least 6 months of salary saved up for emergency purposes. Then anything over that is for a down payment. With an FHA loan even at 3.5% down, you'l be paying their extra mandatory mortgage insurance premium for the life of the loan. Additionally, you have a child but what if the mother/father is late on payments for months?

It is my opinion your savings needs to be improved greatly to afford a house. but you are looking to the do the right thing.

This can be offset if your plan includes having a roommate or family member there to help with the house payment.  FHA does allow for co-borrowers who will not be occupants. Wow. my opinion has changed if you can do this creatively. You are doing the right thing for yourself and child. Be persistent and good luck.