My husband and I have been living rent-free in a house owned by my parents for the last 10 years.?

Question

Will having no rental history affect our ability to get a loan to purchase a home?

Unfortunately, we do not have a huge down payment. The house is in a very rural area with limited employment opportunity. We have both been going to school full-time and working part-time for the past four years. We now have our degrees but are pretty broke. We have about $7,000 saved and $10,000 in student loans that are about to go into repayment. We have two children and it's a two bedroom house so we really need something larger and we want to move closer to civilization. :)

Unfortunately, we do not have a huge down payment. The house is in a very rural area with limited employment opportunity. We have both been going to school full-time and working part-time for the past four years. We now have our degrees but are pretty broke. We have about $7,000 saved and $10,000 in student loans that are about to go into repayment. We have two children and it's a two bedroom house so we really need something larger and we want to move closer to civilization. :)

Answer 1

just get a letter from ur parents stating that they wanted to help you save money to purchase a home
also u could use bills as proof that u lived there for that long

Answer 2

Not really. While that history could certainly help.. not having it really doesn't hurt.

You credit score is based on your actualy credit history and as long has you have had good credit relationships in the past you'll be fine. Having a car note or two with ontime payments will certainly help.

Now.. if they don't see a good credit history and you don't have a rental/purchase of a residence then they loan adjuster may wonder how someone that has been living with out the most major of expenses could have these kinds of problems. And... what's the possiblity this person is going to have any more troubles once a large note as this is done.

But ... all in all.. I think you'll be OK. I suggest you find a good mortgage loan officer and get pre-approved. It won't cost anything and you'll know exactly what you can buy!

Hope this helps and good luck!

Answer 3

No, it just means you have lived with your parents approval in a home they own so you could save money for the down payment...being qualified for a loan would be more towards your credit history, payment history, and work history....

Answer 4

if that is the case/u should have a big down payment saved up/all loan companies/ the criteria is different/call around choose the best for u

Answer 5

It shouldn't if you make sure you make it clear to your lender what has been happening. Also, if you have saved the rent you haven't had to pay, you should have a fairly impressive deposit by now.#

#edit#


Then best foot forward then. We've all assumed the wrong thing. Best of luck. And I'm sure you will be lucky. xx

Answer 6

no, especially since you must have a huge down payment saved up. Your parents are great

Answer 7

I think your credit report will be more important to a potential mortgage lender. Your earning ability should also be a plus.
Find a creative lender - they are out there - and good luck.

Answer 8

yes. unless you have like a 45% down payment because you have been saving up your money while living rent free. Otherwise banks will look at it like you are irresponsible. With that much of your income not being spent on a place to live, they will assume you should have a hefty savings account.

Answer 9

No, it won't. I've always lived rent free. I've been able to secure loans for property. One of the factors used to give you a loan is your employment history.

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Answer 10

Where you stay and if you pay rent or not would not normally be a problem. Many individuals that were currently staying with their parents have been able to purchase a house with no rental history.

What do concern me is that in your statement you indicated, your student loans would be going into repayment. This is a sign that you might be having financial problems and your credit score would not put you in a
position to be approved for a mortgage loan.

It might be that you would contact a local mortgage lender and apply for a FHA or USDA mortgage loan. The approval requirements are not as great as applying for a conventional mortgage loan. Also the down payment needed is lower than applying for a conventional mortgage loan.

Buying a house is a step by step process, this is the first step you should take in order to purchase a house. The rest of the steps will fall in place, no matter the type of property you are purchasing.

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, you can find one in your local telephone book.

Make sure this mortgage broker or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.

He will fill assist you in the filing out of the mortgage loan application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of  your monthly income earned would be used in a formula to determine what is called a debt ratio. This debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%.

When you speak with the mortgage loan officer you will need the following documents to complete the loan application, there will be others, but this will get you started.

#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.

Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.




What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

So select the best option for you and your financial situation.

You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

The down payment of a house would depend on the mortgage loan program you are approved for. There are many and varied programs available to you than just the conventional mortgage loan.

#1. Conventional mortgage loan

Normally 5%-10% down payment.

A. 20% down

If you want to avoid Private Mortgage Insurance (PMI)

#2.FHA mortgage loan

Normally 3.5% down
There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

#3. VA mortgage loan

There is no down payment

You must have been in the United States military active duty, veteran, or retired.

There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

#4. USDA mortgage

There is no down payment required

Normally to be approved for this mortgage loan the property you are purchasing must be a farm or rural property.

There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

I hope this has been of some benefit to you, good luck

"FIGHT ON"