Home Buying in 95834>Question Details

Laurenemalm, Home Buyer in Kirkwood, MO

Can we qualify for a FHA Loan? Can retired Co-signers help us qualify? HELP!!

Asked by Laurenemalm, Kirkwood, MO Tue Nov 1, 2011

Situation: My Fiance and I are wanting to buy our first home, I have been looking into the process for a while and have started to worry that our student loans will no allow us to qualify. I graduated with my degree and found a job in my field where I have been working for the same company for 1 1/2 years. I make 35K a year, and have a credit score of 730. My Fiance in Chiropractic school, graduates this December and already has a position lined up to work with another Doctor in our area. He has not held a job during his schooling, & currently has a credit score of 750. We currently have 27K saved, and were hoping to on only put down 3.5% and use the rest as monthly mortgage payments.

I have been reading material about the Debt to Income ratio and am worried that due to our student loans we will not qualify for an FHA loan on our own.

His parents have offered to Co-sign, but I am worried that because his father is retired we still may not qualify.

Thanks for your help,

Lauren

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Answers

16
Is essential that you start by shopping around for a mortgage broker, they have access to many banks, private lenders and many different programs. The property value for which you can qualify depends on your personal financial conditions, employment history and debt to income ratio. Only a professional looking at your documents can sort through your financial options.

Best of Luck,

Maria Cipollone

http://www.Flahomespecialist.com
2 votes Thank Flag Link Tue Oct 2, 2012
Your question is very well thought out. But are you looking at buying in Missouri, or in the Sacramento, CA area (where you posted the question?) Many of the respondents have given you their favorite lender here in Sacramento.

Trevor gives the most thorough answers to your questions, but as the situation should be reviewed with a local lender, it might make sense to call some that have been recommended, if you're coming to Sacramento. The discussion on having his parents co-sign is another whole discussion and should only be considered as a last resort (for reasons too long to spell out here). You're on the right track and many lenders will consider your qualifications as a student as part of your work experience....

Good luck, and I think you'll find the right home soon.
Web Reference: http://www.suearcher.com
2 votes Thank Flag Link Tue Nov 1, 2011
I really liked Claudia Gravelle's and Rob Spinoza's thoughtful answers here. You are not married yet, so you do not have to put your future hubby and his debt on the purchase contract and loan application. Using your income alone you should be able to qualify for a starter house or cozy condo here in the Sacramento region. Your prospects look good for the future. The loan underwriting guidelines focus on the here and now.

I am not a fan of casually bringing in co-signers. The complications to the purchase process, loan, escrow closing, decisions during ownership, and eventual exit strategy for the sale of the property when you are through with it increase exponentially when you bring in two additional purchasers.
1 vote Thank Flag Link Wed Nov 2, 2011
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
Laurenemalm,

Ultimately you'll want to have a mortgage lender run a pre-approval for you and the best starting point is the simplest. In your case here, I would look at the income, credit and asset profile of you and your fiance' before we involved any non-occupant co-borrower (co-signor). One thing to keep in mind is that CA is a community property state, so if you apply for an FHA loan once you're married, your husband's liabilities must be considered even if he does not go on the loan. This is not true prior to being married, so you may have an opportunity now that you won't have later.

Finally, the rule of thumb for he non-occupant co-borrower is that you want them to:
A) Contribute income.
B) Not contribute too many liabilities.
C) Not harm the credit profile of the primary borrowers.

I hope this helps, but if it is confusing just get in touch and I'll walk you through!

Rob Spinosa
rspinosa@rpm-mtg.com
1 vote Thank Flag Link Tue Nov 1, 2011
Good afternoon Lauren,

First and foremost, your questions are smart and on point, and these deserve a proper airing with a Licensed Mortgage Banker in your area. You can verify the License of any Loan Originator on the nmlsconsumeraccess.org website.

Next, to your questions:
1. If the student loans will be deferred for at least 12 months from closing date, those debts are not counted against your total liabilities. It sounds as if your fiance at least may be able to defer his loans since he is not yet graduated.
2. FHA allows for Non-Occupying cosignors. Retirement income is acceptable. The Mortgage Banker will take into account your parents' housing expense (their rent or mortgage payment) and outstanding debt along with your proposed housing expense (the mortgage payment on the house you wish to buy) and outstanding debt to qualify. The only issue here would be if your fiance's parents already have an FHA mortgage.
3. Do not use your money to pay down debt until after you have consulted with the Mortgage Banker. Too often we see clients who undertake to resolve the "wrong" credit issues before prequalification thus making the qualifying process more difficult.

Overall your situation sounds like a perfect case for an FHA Insured Loan: the mortgage loan designed to make it easier for renters to become homeowners since The Great Depression!

Trevor Curran
NMLS #40140
1 vote Thank Flag Link Tue Nov 1, 2011
Hi Lauren: This is a little complicated with your fiance not yet working.
You may want to consider having just you on the loan with the cosigners. That way we just need to use your student loans with your income.

If you want to use your fiance's income, you will not be able to close escrow until after he receives his first paycheck...and that must be salary. Commission and bonus will not be counted.

You are welcome to send me your detailed information and I can run some numbers for you.
FHA will let you go to 49% of your income going to house payment.
There are also some very good first time homebuyer programs for you to consider. cg
1 vote Thank Flag Link Tue Nov 1, 2011
A few questions come to my mind: are his parents currently receiving any kind of government assistance such as medical and/or medicare? Do you anticipate his parents to be moving into a nursing facility that will require goverment"s subsidy? If the answer is "yes" to any of these questions, my first advise is for the parents to consult with a representative at the Social Security Administration Department. These answers alone will determine whether or not it is a good idea to have his parents to co-sign on a loan.

Please call me if you still need my assistance.


Gwen Cao @ SVCF
916-812-1814
dre #01220501
NMLS# 274715
0 votes Thank Flag Link Wed Oct 3, 2012
Parents can be co-borrowers on a FHA loan to help. Give me a call if you would like me to check your debt-to-income ratios. 858-922-7899.
0 votes Thank Flag Link Tue Oct 2, 2012
Hi Lauren, without knowing all of your debt obligations and your total monthly gross incomes, it is difficult to determine whether or not you and your fiancee are qualified. Your credit scores are great but we need more information.

Please give me a call if you are still looking for an experienced loan officer. I have been originating loans, both conventional and government loans, for 14 years. I am looking forward to be able to guide you through your loan process.

Gwen Cao @ Silicon Valley Capital Funding
916-812-1814
DRE #01220501
NMLS #274715
0 votes Thank Flag Link Thu Jan 12, 2012
Lauren,

The simple answer is it doesn't matter if his father is retired, what matters is what his income is. If he makes enough to cover his expenses and have enough to still help you guys qualify for your home it shouldn't be a problem with an FHA loan.

Of course your finance's father also has to meet the minimum credit guidelines as well, but it's not a problem that he is retired as long as everything else qualifies.

Sincerely,
Greg
0 votes Thank Flag Link Tue Nov 1, 2011
Hi Lauren,

Are your student loans currently deferred for at least 12 months? If so, FHA doesn't count them in your debt to income ratios.

Make sure that your fiance is going to be paid as an employee (w-2) and not as contractor or 1099ed.

He will also need 30 days worth of pay stubs prior to closing.

The only way to find out whether or not you'll qualify is to get pre-qualified by a mortgage professional.
0 votes Thank Flag Link Tue Nov 1, 2011
Hi Lauren,
Great question! And we've already had some great answers as well. It sounds like there are multiple ways this may work out for you. Between you and your fiance's credit scores, your income, and his parents agreeing to co-sign, you have many different ways to approach the loan. The only way to be sure if you can qualify is to contact a local mortgage broker. Local is the key word...they're going to know the local programs that you may also benefit from (like grants). I often work with Kevin Fritz at Big Valley Mortgage in Roseville. You can contact him at 916-960-1325. He's professional, thorough, honest, and easy to talk to.
Happy House Hunting!
Web Reference: http://www.MorganLarson.com
0 votes Thank Flag Link Tue Nov 1, 2011
I would call Glenn Olsson He is a Local Lender and is very experienced with your scenario. He works with a bank but, can also broker it out to many other banks. This will give you a lot of flexibility in the approval process.

He number is 916-276-6236

If you would like a good Realtor to help you with your property search, I can help you with that.

James Collins
Connect Realty
916-257-3779
DRE LIC. 01014820
0 votes Thank Flag Link Tue Nov 1, 2011
Hello Lauren,

Your and your fiance credit scores are excellent on top of the job you have. The debt to income ratio is calculated based on the monthly payment due and not on the outstanding balance. To keep your mind at ease, contact your local mortgage lender to know your financial capacity to purchase. From what I have read so far, you are on your way to home ownership not counting the co-signers. Of course, this is just my assumption.

As I have mentioned, contact a mortgage lender/officer. They are the experts on this field.

Good Luck.

Maria
0 votes Thank Flag Link Tue Nov 1, 2011
Your scenario does not look bad to me,but I am not a loan officer. I think it's very positive that you have some savings, and some great credit scores. It is possible that your student loan payments could make your Debt To Income ratio off. Or, it might be that once your fiancee is employed, that could make your income better if you do have trouble qualifying based on DTI. FHA's are great loans. Why not call a loan officer and get pre-qualified. Worse thing that could happen would be that you'll find out exactly what you need to qualify, and THAT'S A GOOD THING!

I recommend John Casy in this case. He has worked wonders for my clients who are, or might be "borderline" in their ability to get a loan. 916-205-0582.

Please tell him I referred you. That way, you won't be a "total stranger".
Good luck, let me know if you need anything else.
Web Reference: http://www.kyleeroe.com
0 votes Thank Flag Link Tue Nov 1, 2011
You could likely qualify because of your savings, credit score and steady income. If you call me at 916-712-6163, I'll review your needs and put you in touch with the right mortgage office that is honets and experienced.
Bob Ingols
0 votes Thank Flag Link Tue Nov 1, 2011
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