Home Buying in San Jose>Question Details

Miguel A Bar…, Home Buyer in San Jose, CA

How much down payment do I need to buy a house in San Jose, CA?

Asked by Miguel A Barreras Jr, San Jose, CA Thu Apr 30, 2009

We have been denied twice for an FHA loan. My wife and I have been claiming my parents house on our taxes for the past two years. We do not live in my parents house but is under our name because my parents couldn't refinanced it on their own due to credit issues and income. What options do we have? Is there any other way around the 10%, 20% down payment requirement?

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2
If this were 2006, the answer would be 0.

I think, the game is up, the bubble has burst. Banks can no longer keep giving away loans to drive up demand (and consequently, the property prices), so 20 % is minimum so that they can cover their A$$e$ in the event of a foreclosure.
0 votes Thank Flag Link Sat May 2, 2009
COMPENSATING FACTORS!!!! Who's paying for the mortgage? The reason I'm asking is because if you can provide proof that your parents are paying for the mortgage, than you can make it a rental property. You will have to dictate that you and your wife are buying a primary residence and not a rental. FHA loan can allow you to put only 3.5% down, but I'm sure you already know that. I was in the same situation for my in-laws. Regardless of who's living in the property, you are still considered an owner. The reason you are not being approved for FHA is for a few factors:
1. Your debt-to-income ratio is over 43%, but usually due to compensating factors you can go up to 45%. Debt-to-Income ratio has two percentages. The bottom percentage is the your future housing expense versus your combined household income which should be at 35% or less. The top ratio is the total debt which includes any car loans, credit cards, mortgage, taxes, insurance, etc. This ratio should be below 43%. If you truly can prove that you do not pay the mortgage at your parents house, then consider them as renters and complete a lease agreement. Then the loan officer, whomever it may be, can take 70% of the rental as income to add to your DTI ratio. Banks are a lot more stringent so provide good documentation and you should be approved. Let me know if this helps.
Web Reference: http://www.fha.gov
0 votes Thank Flag Link Thu Apr 30, 2009
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