What can I do to get a bigger home loan?

Question

I am looking to buy a home in Illinois, I will be a first time home buyer and I make approx.$44,000/year and my wife makes approx $19,000/year for a total of $63,000 gross/year. We have good credit. i am looking at buying a home for around $105,000 price range but can only get approved for aroung $90,000, what steps can I take?

Answer 1

There are a lot of other factors to consider - DTI (Debit to Income Ratio) For FHA it is 19/43 The 19 percent is for your house payment. The 43 Percent is TOTAL Debit. Housing Payment, Property Taxes, Homeowners Insurance and Anything that is listed on your credit report that you are paying on. Your income is good, so the Debit is pulling you down it sounds like. Was this a approval for a FHA loan? Conforming Loan? One thing you may want to do, is see who is carrying the most Debit on his/her credit report. The one that is carrying the least amount of Debit (payments being paid out each month) could be on the loan (by them selves) if you could qualify on only that income, but if it is the wife @ 19,000 year Than you would need both incomes. Talk to a professional mortgage broker that can underwrite in your state of IL, and one that does MyCommunity 100 programs, Flex 100 programs, FHA, Conforming etc. Especially since your credit is good. Subprime DTI is at 55 percent, but rates are higher.

If you go FHA that is at a 97 percent, but he seller can do 3 percent toward the down payment (by using the AmeriDream Program), even though there is a fee that the seller pays (normally 500.00) it does get you into the home at 100 percent, and the seller can also do up to 6 percent of your closing costs if needed. Check out Ameridream.org www.hud.gov www.fha.gov

It looks like you have decided on how much you want to spend, but are you wanting to escrow the taxes and insurance? Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 P/I Principle and Interest would be 698.57 based on 105,000 @ 7 percent 30 yr fixed; for a total payment of 865.00 This is just a estimate - ok - It greatly depends if you need help with closing cost, if you have money to bring into the table - so you do not have to borrow the full 100 percent. Rates are still in the mid to high 6's but they are getting higher - ok. If your credit is in the 500's to low 600's than the rate would be higher - lots of factors to consider. Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down. Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Answer 2

Put more money down, look for looser qualifying rules at another institution, I believe there is still some high DTI ratio programs, but they are more expensive interest rate wise. Shop around with at least 3 or 4 mortgage companies.....get a second job to qualify for more house...although some banks want to see the 2nd income for at least a year before using it. Go over your finances and make sure with all of the other expenses like Taxes, insurance, maintenance and utilities you will truly be able to afford a $105K house.

Answer 3

I'm really at a loss, you appear to be well able to afford the house, by my arithmetic.

Your question does not contain critical information:
How much are you putting down as a down payment?
How much are you already in debt for cars, credit cards, etc.?
What duration of mortgage are you looking at?

You haven't said who you have been talking to. One very conservative bank?

This shouldn't be a mystery. Sit down with a home mortgage broker and lay out your finances. He should be able to explain the limiting factors. Get names from realtors if you can't find one on your own. Use a small local independent place, not some mass production or online company.

Answer 4

You must develop sales or have a bigger down cost. Home mortgage is accepted for not more then three instances annual sales. If you wish to borrow 400k then you definitely must earn 150k a 12 months.

Answer 5

You are not being approved for a larger loan because you will not be able to afford the payments along with your other monthly expenses. It is nice to see that the lenders are trying to keep buyers out of trouble, for a change.

Answer 6

well you could buy a home and the owner could personally finance it...it would save you both money