Best of Luck,
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.
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.
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!
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!
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
Please call me if you still need my assistance.
Gwen Cao @ SVCF
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
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.
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.
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!
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.
DRE LIC. 01014820
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.
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.