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Will I qualify for a mortgage?

youdontkillmoney
Valued Contributor

Will I qualify for a mortgage?

First time homebuyer. I've been holding off since I was not sure if I want to stay in California (actually I know I don't), I would like to move to Oregon or another state but I have too many roots here with career and family, etc. So I guess I should start getting rooted here if I am not going to move. What are your thoughts given the information below:

 

  1. CREDIT.  FICO scores at least 780 across all bureaus is what I see when I applied to credit card companies in the past and they send me my FICO they used. Credit Karma, Lifelock, etc. currently show 820+. Never checked my mortgage FICO but I think it will be strong. Had credit since 1991, no late payments or missed payments ever. I recently closed several credit accounts, I had 23 credit cards, now down to 4 credit cards and 5 personal lines of credit. All zero balances by the end of the month, every month as I pay in full each month. The wife has a better FICO score than me at 836 (Credit Karma). She has 1 credit card and will soon pay off her $40K student loan she had since 2004, there is a $525.00 balance which will be paid off in a couple weeks. She is also an authorized user on my AMEX platinum and IberiaBank visa card. On the credit front we are both very strong. 
  2. INCOME.  Combined gross income is about $250,000 - $270,000 annually. Plus I gross an additonal $10,000/year not included in the combined gross income figure just stated from a part-time job I've held since 2002 or 13 years straight and will continue to hold, I get W2's for this part-time job each year.
  3. SOURCE OF INCOME.  Wife and I get W2's as full time employees, salaried.
  4. MONTHLY DEBT PAYMENTS.  After paying off the wife's five hundred twenty five ($525.00) student loan remaining balance in the next couple of weeks, we each will have zero debt on each of our credit reports going into the mortgage application process.
  5. EMPLOYMENT.  W2, full time. Both ten years at each of our current jobs and we plan to remain in our jobs.
  6. ASSETS/RESERVES.  About $70,000 in cash savings in the bank. Her 401k has $200,000 and my 401k has $100,000. We could each borrow $50K each for a total of $100K and use this if needed, but that'll mean we cannot use our 401k as reserves. We could also borrow $10K from an IRA if needed for a home. If we borrow from our 401k and IRA and combine with cash we'd have $180,000 available for a downpayment but may not want to use all of it since we need some for closing costs and reserves, etc.
  7. LOCATION.  Los Angeles, CA
  8. PROPERTY.  Single family home.
  9. VAULE.  Probably $700,000 - $850,000+
  10. OCCUPANCY.  Primary residence
  11. TRANSACTION TYPE.  Purchase, first time home buyers for each of us.
  12. TYPE OF LOAN: I'm leaning towards a Jumbo, preferably 10% down deal. Haven't looked around yet. Plan is to wait until we file taxes in Feb 2016 or so and use 2015 as one of the last two years' tax returns. So obtain preapproval around March 2016 but defnitely before June 2016. Be moved into a new home by Dec. 2016.
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3 REPLIES 3
Revelate
Moderator Emeritus

Re: How much will I qualify for a mortgage?

You'll be fine, I'm qualified for what you're looking down on the 160K income I claimed and it's not even a DTI stretch in the jumbo world (I went 20% down though, would've gone 15% had I cleared 740)... probably with worse credit too as I only hit the 720-740 tier. Is worth pulling the 3B instant in time scores here before you go shopping, there's some differences in the jumbo market between clearing 740 and clearing 760 depending on your lender.

 

Just napkin math, you have on the order of 9K / month in payment at 43%.  If you went 10% down with your full monty DP (btw I don't think the loans would blow your reserves, IRA/401K's are calculated at 60% of balance for reserves and you have plenty left for that) at 160K w/20K for closing and whatever at call it 4% today is something like 1.6M assuming the 10% jumbos are calculating on a similar backend ratio.




        
Message 2 of 4
youdontkillmoney
Valued Contributor

Re: How much will I qualify for a mortgage?

Revelate, thanks for the detailed reply. It's helpful, I am still reading up online about how this works as a first timer, plus looking at different bank/credit union sites. Again,thanks for the insights/info!

Message 3 of 4
Revelate
Moderator Emeritus

Re: How much will I qualify for a mortgage?


@youdontkillmoney wrote:

Revelate, thanks for the detailed reply. It's helpful, I am still reading up online about how this works as a first timer, plus looking at different bank/credit union sites. Again,thanks for the insights/info!


I would expect by the time you go shopping there will be a lot more 10% jumbos than there are now; talk to a bunch of lenders though if chasing jumbo land... your file should be even easier to underwrite than mine (and mine isn't difficult) but I got tossed out of a couple lenders because of my 2014 income, and this being jumbo space, their product and rate sheets will be all over the place as it's not regulated at all.  

 

Jumbos are literally the Wild West show here in Socal.




        
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