Large Downpayment But Low Income?

[Anonymous]

Hi all, it's been awhile since I've frequented these boards! I'm currently in a bit of a unique situation and I'd appreciate some feedback.

I was laid off from my job of over a decade almost two years ago. At the time I was also living with and caring for my elderly father so had very few bills. His needs became more accute so I never went back to work full time. I maintained a freelance job in the same industry, plus another freelance job in a different industry. My father died last month after a long illness, leaving me what is to my mind a large sum of money but is apparently not enough to buy a decent place outright in SoCal. I'm still working the freelance jobs and making about the same as when I was employed full time with far fewer hours required, but it's not very much. So basically I'm in the opposite position of many homebuyers; I could put 75% down, but will anyone give me a mortgage with no full time job and low income? I could certainly make the monthly payments on the amount of money I'd need to borrow but I'm not sure it really looks like that on paper.

Rent in SoCal is completely unaffordable (much more so than the mortgage I hope to get) so I do think my best option is to buy. But do I have to settle for the kind of place I can afford outright? Spoiler alert, these places are not very nice or conveniently located despite costing over a quarter of a million dollars. It's insane. But a 75k or 100k mortgage would open up many more possibilities.

My credit scores are all in the 740 range, and I am debt free. I can't leave SoCal because my job is very specialized and only exists and pays well here. I'm not looking for anything crazy, just a small one bedroom condo (with parking... Laundry in unit would be a dream...).

Thanks in advance for any thoughts or insight you can provide.

[NC_Mtg_Loaner]

You should certainly speak with a licensed loan originator in the So. Cal area to see what loan programs for which you might qualify.

It's all in the #s of your proposed DTI and whether the work you do passes the stability test and the amount of  your effective income...

Are you self-employed or W2?

[Anonymous]

Thanks for your reply!

Honestly I'm afraid they'll just laugh at me 😂 I do have a friend who is a mortgage broker and we've spoken but that was when I thought I could get a co-signer. Unfortunately that isn't possible so I'm not sure if I should even bother now. I don't want to waste my friend's time. 

The industry freelance job is W-2, the other is self-employed. I'm not completely certain what the standards are for stability in terms of employment... I've been in my industry for over 15 years and am part of a union. As I mentioned my work is specialized so there is a finite pool of people who can do it. It's also changed significantly in the past 10 years, such that new people coming in won't ever be able to develop some of the skills I have because that equipment is so uncommon now. I could work more hours at the industry freelance job or possibly find full-time work but weirdly the full-time jobs tend to pay less. So it would be easy to have a more stable income but actually make less money. But maybe that's a trade off they'd prefer to see. 

[NC_Mtg_Loaner]

If you are self-employed you will want to have a loan officer review your income tax returns for the last two years in order to determine your qualifying and effective income.   Two year history of self-employment is considered stable so a mortgage bank/lender will want to see your income tax returns for that period.

Good Luck.

[Revelate]

There's got to be someone, you just might need a specialized loan program.

30% down has always been a gold standard line, it's basically zero risk for the lender.  You might need to get a different product than the usual FHA/conventional/etc. but when you're talking 75% down there's got to be someone who wants your loan, certainly some portfolio lender will, there's no risk.

[tags03]

Newbie here so I'm not sure if this information will help but I'll pass it on anyway! I have a  low-moderate income as I have worked for a non-profit for the last 10 years. I was very concerned about my low income and moderate credit qualifying me for a decent house. During my research, I stumbled upon the Fannie Mae Home Ready mortgage. It's low-income friendly and can be extremely flexible regarding types of income and downpayment amounts and gifts. Not sure if it would work in your area but no harm in looking into it. 

[Anonymous]

Thank you for this! I'm going to pass all these suggestions on to my friend and cross my fingers... I can't afford rent on my dad's place for much longer before having to dip into my inheritance to supplement so I hope to get all of this figured out soon!