Mortgage advice welcome!

Submitted by mcleod4188 t3_zzkp3e in personalfinance

Hey all,

First time home buyer. I can only put about 10k for a downpayment, and making about 34k yearly. Looking in the price range of 240-300k house. I'm not too worried about monthly mortgage payments since I'm confident I can find renters, and I'm willing to work a second job as well.

What are my options in terms of a mortgage? After the 10k down I'd have 1k at most for extra fees. What kinds of extra fees are typically associated with home buying?

I have heard about the home ready program, which sounds good, but I'm pretty unfamiliar with mortgage terminology in general so I'd love any extra insight.

Thank you for any advice!!

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Jmb3930 t1_j2c98ux wrote

Rule of thumb of mortgage of no more then 3x your yearly salary. 300k is closed to 10x

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nkyguy1988 t1_j2c6l7t wrote

Just being brutally honest. You will absolutely not be approved for even a 240k mortgage making 34k and only 10 down.

You need to double your cash for down payment, closing, and emergency fund, then cut your purchase price budget by at least half of the low end. Even then you will possibly need additional earned income.

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annalyzethat t1_j2c88wc wrote

I’d recommend a first time homebuyers course like this one from Fannie Mae to get you started and help you learn about what goes into qualifying! The first time homebuyer subreddit is also super helpful. House hacking/renting rooms can be a great way to get started but it isn’t risk free, so making sure you have enough cash to cover emergencies after closing is critical.

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fromKCtoAZ t1_j2c9ygn wrote

34K is gross or net?

Lenders will only lend about 3x gross wages at current rates. $34K gross would be roughly $100K.

Unless you find a lender special, FHA requires about the lowest down payment at 3.5%.

Lenders will charge PMI/MIP if you don’t put 20% down.

Property taxes, homeowners insurance, PMI/MIP, and HOA fees will all affect your monthly mortgage payment and how much house you qualify for.

Any on-going debt payments will count against your available income.

Roommates will not be considered as qualified income unless you are purchasing a property jointly. If it is a multi-family unit, rent for a separate unit may be considered.

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g92592 t1_j2cgwsr wrote

You should start by reading the homebuyers info in the post above.

I don't believe, no matter the program, you would be approved for a mortgage at the price range you are looking at. You don't make enough money to qualify. Lenders are not going to factor in rental income from letting rooms.

Admirable goal.... Probably not at this time though

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Loko8765 t1_j2dgc1o wrote

If you expect to finance your mortgage with renters, don’t treat this as a simple home mortgage. It’s a business loan and investment and should be treated as such.

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BastidChimp t1_j2en3sd wrote

To be conservative your monthly mortgage payment should not exceed 30 percent of your take home pay. The rule of thumb is actually based on your gross income but by being conservative you have more wiggle room to account for homeowners insurance, possible HOA, regular maintenance, utilities, property taxes, etc. It's not just about the mortgage for home ownership.

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Dontstarveisfun t1_j2c90e7 wrote

At first blush you don't seem to have enough to qualify but you are right there are a lot of programs out there.

I would see if they have a, "first time home buyer program" for your specific state/local.

https://www.hud.gov/states

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ephemeraltrident t1_j2c68j3 wrote

This seems tight from a budget standpoint. Best advice I can have for you is don’t have any other debt.

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pmmytn45 t1_j2c6to7 wrote

Your loan to value is not great (down payment Vs house price cost). Also, not sure what the implications are if you were to tell your mortgage advisors you intend to let out a room. Plus you will be entering a while other space in terms of getting electrical and gas certification etc if I'm not mistaken.

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