Financing in Boston>Question Details

Zachary, Home Buyer in Boston, GA

Can my wife qualify for a mortgage even though I'm a student?

Asked by Zachary, Boston, GA Fri Jul 8, 2011

I am about to be a dental student in the Boston area and my wife is looking to buy a $300k condo. She has about $100k to put down and has a steady job at $45k/yr, plus she is completely debt-free and has excellent credit. Will she be able to qualify for the mortgage on her own? Will my impending student loan debt keep her from qualifying? She would be the sole owner of the deed and holder of the mortgage.

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Q: Can my wife qualify for a mortgage even though I'm a student? Will my impending student loan debt keep her from qualifying?
A: You being a student and having a lot of student loans debt wouldn't have any impact on your wife's ability to get a mortgage. Massachusetts is not a community property state, so your debts are your own debts, and your assets are your own assets (very layman's definition of community property), and so if your wife is applying for the mortgage on her own, your credit or what you do for a living, or how much debt you owe or would have payments on does not impact her qualifying in any way.

Q: Will she be able to qualify for the mortgage on her own?
A: It's going to come down to what the interest rate is, how much the property taxes are and how much the monthly HOA fee is. With high property taxes &/or HOA fees her debt ratio would be too high. Let me break it down...

So she has $3750/mo of income. Let's take that $300k sales price, $100k down payment, and a 4.75% 30-year fixed interest rate (which is a common interest rate today for no points), the principal & interest portion would be $1043.29/mo.

Taxes can vary quite a bit in the Boston I've found (most of my lending has actually been outside of Boston proper, like Salem, Needham, Stoughton, etc.), so getting an accurate read on that is important. Let's say on a $300k condo the taxes are $4,500/year though, which breaks down to $375/mo.

Let's say your condominium has a $250/mo HOA fee, which covers the homeowners insurance as well as what is called a "Walls-In" policy which lenders now require on condominiums (this means you do not have to pay for separate walls-in coverage, but if it's not included in the HOA fee, then you do need to pay for separate walls-in coverage).

The total housing payment is $1,668.29/mo, which would be 44.488% of her gross income, and with my recent experiences running loans through Fannie Mae & Freddie Mac's automated underwriting system about 45-47% is where the "housing ratio" caps out at, and since your wife has no consumer debt, her "housing ratio" would be the same as her "total debt ratio" (which can qualify up to 54.99% with Freddie Mac, 49.99% with Fannie Mae - those are hard caps with any lenders offering those programs), so 44.488% is pretty darn close to that threshold.

She can also use some of the money that you were earmarking for a down payment to instead buy down the interest rate, for that same above scenario with a $94k down payment and paying 2 points to buy down the rate to 4.25% (this isn't a quote, just showing you the trade off of paying points in relation to lowering the rates), it lowers the debt ratio to 43.691%.

With excellent credit, and having at least 2 times the proposed monthly payment in "reserves" (checking, savings, % of retirement accounts, etc.) available after closing, then her higher debt ratios should be able to qualify, but it's all going to come down to what the automated underwriting system spits out since she is right against the threshold. We were able to just squeak a buyer in on a home with Fannie Mae financing at a 44.964% debt ratio recently, it took some very careful planning on what they could look for, but they got their dream home by maximizing what they could qualify for.

Maximizing what you can qualify for is a different topic in itself, it may not be the wisest to do so considering that you may not have any income but would have this mounting student loan debt.
2 votes Thank Flag Link Fri Jul 8, 2011
Those facts look very good so I don't see why she wouldn't be able to buy a home. However, the first step in the buying process is to get a pre-approval letter (read: not pre-qual letter). Then you will know how much you can afford and it will be easier to get your offer accepted and to eventually close. I hope this helps.
0 votes Thank Flag Link Sat Oct 20, 2012
Give me a call anytime to discuss. I would be more than happy to assist you. Thank you.

Carey Hansen
NextGen Realty
0 votes Thank Flag Link Mon Oct 1, 2012
Hi, Zachary.

So long as the taxes and condo fees aren't out of control that appears to work if we use your wife as the sole applicant. Standard Fannie and Freddie guidelines may allow her to go up to a 45% back ratio. That means her total monthly payments on all obligations would need to be under $1687/month if she's earning $45K/year. And barring outrageous proprty taxes and condo fees you should be well under that. And even if the down payment money is currently not under her name we can still likely use it without issue. I think you''re good.

We do a nice job here at Annie Mac Home Mortgage with proper pre-approvals, getting offers accepted, customer service and competitive terms. I'd like to help you with your financing. Please give me a shout when you're free and we'll get the ball rolling for you. I'm local too BTW if that helps.

0 votes Thank Flag Link Sun Jun 17, 2012
Hello Zachary,
My name is John Leavitt I am a Mortgage Loan Officer.
1. I would have to check credit and past history to give you and answer.
2. How long has your wife been working.

If your wife would like to get pre-approved please give me a call 781-472-3915 or 617-510-8682
Thank you,
John Leavitt
0 votes Thank Flag Link Sun Jul 10, 2011
Jack! Good to see you, buddy!
Flag Sun Jun 17, 2012
You got the numbers, so I agree, let Shane below guide you into a good position to buy!
0 votes Thank Flag Link Fri Jul 8, 2011

Shane is correct on all counts, he may even beable to assist you getting your wifes mortgage.

Good luck

Louis Wolfson
Web Reference:
0 votes Thank Flag Link Fri Jul 8, 2011
It is certainly possible.
Please email me with your contact information and I can give you some Mortgage professional referrals for a no cost, no obligation pre-aproval.

Ted Duncan
Hammond Residential RE
Web Reference:
0 votes Thank Flag Link Fri Jul 8, 2011
Sounds like she should be fine.
I recommend she contact Suzi Ferrantino at Prospect Mortgage to be pre approved.
Her number is 508-330-5526.
And then call me (617-413-2879) when she is ready to look!
Good luck!
Sincerely, Mary Crane
0 votes Thank Flag Link Fri Jul 8, 2011
If you have a 1ooK down seems like they will give you a Mortgage . The 45 K may be a problem and if you do not have loans yet then it will not show up. Check my listings I may be able to help you and good luck
0 votes Thank Flag Link Fri Jul 8, 2011
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