FTHB asking for advice before I accidentally buy a very expensive patch of grass
I’m a first-time home buyer trying to figure out what options I have. I was pre-approved for about $130k through FHA with 3.5% down, but honestly that price range just doesn’t go very far where I live. Most things around that price are either just land or…
I’m a first-time home buyer trying to figure out what options I have. I was pre-approved for about $130k through FHA with 3.5% down, but honestly that price range just doesn’t go very far where I live. Most things around that price are either just land or need a lot of work. Land would be great if I had a camper or another option, but I’m looking for an actual home. I originally looked into USDA since I’m in an area where it may apply, but I was told the approval amount might actually be lower than FHA. Are there any programs, grants, down payment assistance, or other loan options I should be looking into? Is there anything besides getting a co-borrower(only coborrower I would have is unreliable) or making significantly more money (scarce jobs, I’ve tried) that can help increase approval? I’m trying to figure out what steps I can take because I’d really like to get into a home sooner rather than later, but I feel like I’m missing some options. Any advice from people who have been through this would be appreciated. If any additional info is needed, I’m happy to provide it! (Honestly this is kind of a Hail Mary at this point and I just really need a miracle rn lmfao.)
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My credit is in the 700s and my debt is pretty low (only a car note). The issue is mainly the loan amount compared to home prices in my area, not my credit or debt. ;(
That’s the plan, I’m just trying to see what other options or programs are available while I work on saving more.
They also look at your debt to income ratio. They usually, in my area, do not want the debt to be higher than 30-40% of income. If your monthly debt is higher than their specific limit, that might be affecting the amount they will loan.
My income is around $39k/year before taxes. My credit score is in the 700s and my DTI is actually pretty low, around 14% before a mortgage (mostly just my car payment and a small credit card payment). I talked with Neighbors Bank, and they were the ones who told me USDA would likely approve for less than FHA, which confused me too since I was originally looking into USDA because of the zero down option. I’m in PA, so I’ll definitely have to look more into first-time homebuyer programs and any down payment assistance options available here. I’m still pretty early into the process and just trying to learn what’s out there.
You may qualify for their direct loan program. I'd look for a mortgage broker that is more familiar with all the options available. We just used someone from Guild Mortgage, and they were fantastic and made the process super easy.
Your post was removed because it violated Rule 3: No selling/promotion
Thank you! I’ll look into what you’ve said. The USDA loan is what I looked into first, and what even got me considering buying a home. I definitely want to try harder with it.
With two 70lbs* dogs?
Get a smaller breed next time? Or a townhouse? You can't afford a SFH.
You save up a lot more for your down payment at this point.
The lender told you what you can afford. Make more money or save more money to position yourself to buy a home in the future. If you have a low credit score or debt issues, there must be free resources near you that can help set you on the path to homeownership.
What is your income? Who told you you would qualify for less with USDA? USDA is zero down, so I'm not sure that part is true, also if you're super low income USDA has a second program with incentives that can lower your monthly payment. Check for first time homebuyer incentives in your state. My state offers a program with a lower interest rate and a zero interest, silent down payment assistance/closing cost option.
A couple things worth separating out here. Down payment assistance programs (a lot of states run these through their state housing finance agency) will help cover your down payment and closing costs, but they won't raise your $130k number, because FHA calculates your max loan amount off your income and debt-to-income ratio, not your down payment. So DPA solves a cash-to-close problem, not a purchasing power problem. Some of those programs may also have stricter debt ratio tolerances. What actually moves the $130k number is either more income, a lower payment on the same income, or a lender willing to qualify you at a higher DTI. Since your DTI is only around 14% before the mortgage, you've got a lot of room most people don't have. Ask your loan officer point blank what DTI ceiling they used to get to $130k. Some FHA lenders will go up into the high 50% DTI with strong compensating factors like your credit score and low existing debt. That alone could move your number meaningfully. Doesn't make it affordable necessarily. And don't write off USDA yet just because the number might be lower; worth actually running both side by side since USDA has no down payment requirement at all, which changes the math on cash you need up front. I'm a mortgage broker, hope you find this useful.
You can probably find an apartment.
Consider a condo/townhouse.
If the issue is the approval range and the max amount you've been approved, there's only a couple of options, depending on the issue. If you feel the number is too low/incorrectly calculated, or didn't count/include certain income sources, you can try applying with a different lender, or request a process like manual underwriting, if you have more complicated finances. If another lender basically gives you the same answer/approval range though, that's just might be where you are at the moment. Basic homebuying math guidelines, say you should try to target a price range roughly 3x your gross income. So if you're in the market for a $250k home, you'd need approximately a gross income somewhere about $80-85k/year. This would ideally mean that you an income of X, you'd be able to afford a house costing about Y, and be comfortable/safe enough that you'd still have enough monthly income to keep your DTI ratio in a good place. So where does this leave you? The most effective answer is find a way in to increase or add to you base income. Buying a home on a single income is a lot harder these days and puts you at a bit of a disadvantage in a lot of markets. Alternatively to stretch things you can: -Significantly increase the amount of your down payment. A minimum down payment of 3.5% on an FHA gets you in the door, so to speak, but you're overall approval range is lower. If you can increase it 10, 15, 20% it will stretch your budget a bit, but not radically change it. If you could save a significant portion of the cost for home in cash -- say 40-50%, that could change things. -You could see if you could get a co-signer or someone else to be on the loan application with you, but that comes with some big potential big risk and drawbacks. -Homebuying assistance programs, whether state-based program or something like a USDA loan, NACA program are options for reducing the costs to buy a home with financial assistance and more lower financial requirements to get a loan, but it won't have an impact on the budget range. -Expand/change your search area. If $130k doesn't buy you what you want in your target area, you consider alternative locations where your budget buys more. Or look into relocation to an different area where there's different/better employment options for you or a lower cost of living.
You can probably find an apartment.
Not sure your area, but try 30 minutes out? Sometimes that helps, sometimes it doesn't look for for sale by owner drive around and find houses that don't look lived in and look at your county assessor's site and see who owns and last time it was sold- see if your realtor can make some offers. Sometimes a grandkid will own a house and not live there and would take an offer Not sure if you could get roommate income to qualify if you could buy a place and rent out a room, but worth asking
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