How to buy a home or condo as first time buyers?

Question

My wife and I live in the Dallas, TX area and are thinking about possibly buying a condo or house, and have several questions. We both are young 24 and 22, and have good credit. We don't have too much saved, so we wanted to know what we should consider when thinking about buying a condo or a home? Is either one better? One concern we do have is bottom line how much house/condo can we afford based on what we currently make which is about $3000/mo (We're both still in school). Currently all our bills total about $1800. I've heard about FHA or first-time buyers programs. Also, I've heard credit unions are good for loans as well. So, after deciding how much we can afford, what do we do from there? Thanks for any info.

Just to clarify, the $1800/mo figure includes our rent, car, electricy, etc.

Answer 1

Congratulations on your decision to purchase a home. I say “home” because the decision to buy a house or a condo as your home is completely a preference thing. Basically, it’s all about what works best for you and your wife’s situation. For example, if you are a couple who loves to work out in the yard, then, you would enjoy living in a house. On the other hand, if you don’t want to bother with being responsible for the removal of snow or leaves on your property then a condo would be a better choice for you.

The most important thing is that both your credit scores are good and it appears that after you have paid all of your bills, you still have $1200 left over. You’re off to an awesome start!

You can continue to save money for a down payment or you may inquire with a mortgage company regarding first time buyer home loans that allow 100% financing. It probably would be a great idea to just continue saving toward the down payment so it will keep your interest rates low.

Although credit unions may be a great resource to use for a checking and savings, I feel FHA is probably one of the best programs for first time home buyers to take advantage of. The program only requires a 3% down payment. That's one of the lowest down payments for any mortgage loan offered in today's economy. And as a bonus, FHA allows homebuyers to use gifts from family members and non-profit groups to cover their down payment and additional closing costs and fees. In fact, even a 100% gift (or a personal loan) from a relative to cover all closing costs and down payment is acceptable.

I have included a couple of links with very valuable information regarding how to purchase a home as well as information regarding FHA.

I hope this has answered your questions!

Good luck!

Answer 2

Your debt ratio including the new mortgage should only be about 40% of your monthly income or $1200 (this includes insurance and taxes and for condos HOA dues). So if your current bills include all credit card and loan payments it appears that your new mortgage would need to be less than the amount your paying for rent. Right now your at a 60% debt ratio which would not get approved. Also, make sure you do the calculation with your monthly pay before taxes. Contact a broker and they will be able to determine based on interest rates and your down payment how large a loan you can afford.

Answer 3

You may want to consider going to the FHA website and do a little reading. It will walk you through the steps you need to take and what you need to consider before buying a house. It's a big step and you want to make sure you are ready for it. It may be best to save a little more before you go buy a house.

Good luck!!

http://www.fha.gov/buyer/index.cfm

Answer 4

Stick with a house. There are no HOA fees to pay, so all of your budget for housing is an investment, no rent. ALso it is easier to sell then a condo.

You should qualify for 800-1000 a month mortgage, which is best ti get from your credit union, if you belong to one.

Answer 5

if you're credit monthly bills are around 1800...there's NO WAY you will get a FHA mortgage unless you're buying a 50k home.

FHA requires 2.25% down payment....and no credit lates in the last 12months. The highest debt to income is around 49%.

Answer 6

Find a realtor who will take the time to walk you through the process. Warning: some won't want to take the time; this is OK; just move on until you find a personality fit.