Home Buying in 02129>Question Details

b_vallone, Renter in Charlestown, MA

My husband and I are self employed. How much gross income do we need to qualify for a mortgage if we have a co-signer?

Asked by b_vallone, Charlestown, MA Mon Sep 3, 2012

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The banks look at net income, not gross, for self employed people.
They take an average of 2 years.
If the 2nd year is lower in income, then they will take the lower number (conservative approach).
However, certain items of your tax return can be added in.

So, it is best to set up a meeting with a mortgage pro in your area - and have a chat.

If you have a 2 br - then one bedroom should have a tub - f.e. for the kids.
If the bathroom is nice - and there is tub in a 2nd bedroom - a double shower is fine.

This also depends on what statement you are trying to make.
If you want to project luxury - then a tub and a shower will do better (giving the owners options of bathing or showering). If this is a rental - as long as the shower is nice (and double shower is) - you'll be fine.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Sat Sep 15, 2012
I just read some of the answers on this question and I was surprised.
Here are two of my more recent cases with co-signers on an FHA loan:

Parents co-sign a mortgage for their daughter who was just recently divorced and has just went back to work. She can afford the mortgage but because of her recent re-entry to her profession after a long absence most lenders would be hesitant to give her a mortgage. Underwriters did not use any of her income and relied on her parents income.

Partners co-signed for another partner to purchase his first home with 3.5% down. The buyer for years was already paying $ 2300 in rent. The new mortgage payment was going to $ 3000 per month so there was not going to be any payment shock. The buying partner did not show enough income on his tax returns to qualify. The co-signer helped push the debt to income ratios back below 45% and we closed. I needed to document for the underwriters to show that the buyers were not just business partners but best friends. In fact the co-signer was the best man in the buyers wedding . It helped that the buyer had excellent credit and a good savings patern. It made sense to my underwriters and we closed.
0 votes Thank Flag Link Tue Sep 4, 2012
Thanks so much, Moy. This is exactly the type of information we are looking for. I have excellent credit, and my husband has very good credit, and we are used to paying very high rent payments already (we've lived in Charlestown for the past 8 yrs), so per your last example, there wouldn't be any payment shock for us either. We're not concerned about affording the mortgage or proving that we can, it's just that debt to income ratio, and with our co-signer, we believe we could easily get under the 45% as well.
Flag Tue Sep 4, 2012
If you are using a FHA mortgage, and your co-signer is a direct family member or you can document an established close relationship, then you do not have to show any income if the co-signer can qualify with their income alone.

Aside from following the straight boxed guidelines, the transaction needs to make sense to the underwriter.
0 votes Thank Flag Link Tue Sep 4, 2012
Whenever a self employed prospect approaches me asking how much income do I need to qualify it sends up a red flag. Hook up with a Realtor you trust and then have them introduce you to the local lender they trust the most, good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Tue Sep 4, 2012
It depends on the co-signers income and debts. You should first determine if you can qualify on your own. Easy to do

Rshapiro at assetmortgage dot net
0 votes Thank Flag Link Tue Sep 4, 2012
The amount of the mortgage is based on the amount of your income.
The old method was called 28/36.
While this is not used anymore, it is still a good method for planning a home purchase within comfortable and prudent budget planning.

The 28 = 28% of your gross monthly income.
This is the amount a bank used to consider the max payment that could be comfortably handled by a buyer that was only for the mortgage.
If that amount was $1000, then at 6%, the buyer could comfortably handle mortgage of around $165,000.

The 36 = 36% of your gross monthly income.
This is the amount a bank used to consider the max that could be comfortably handled by a buyer that was only for the mortgage PLUS all the other debts like cars, credit cards, other loans, etc.
If 28% = $1000, then gross income is around $3575.
So 36% of 3575 = $1290+-.

If you keep the 28/36 ratios in mind for your purchase planning, it will help you get a loan.
Of course, ask a loan officer, preferrably one who works for a local lender because they may have more options for creative loans like a co-signer/co-borrower.


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0 votes Thank Flag Link Mon Sep 3, 2012
When buying a house the bank won't accept a co-signer. For a mortgage it all depends on how much you want your house to be plus have at least 2 years of income.

Best of luck.
0 votes Thank Flag Link Mon Sep 3, 2012
Stating that you would need a co-signor to purchase a home is a pretty big red flag.

Unless the co-signor will be contributing to paying the mortgage with you, your best bet is to wait it out. Why rush into something you can't afford?
Web Reference: http://www.MatAmes.com
0 votes Thank Flag Link Mon Sep 3, 2012
You are not renting; there is no consigner in buying. Either you qualify or you do not.
Best of luck.
0 votes Thank Flag Link Mon Sep 3, 2012
Some banks won't consider a co-signer as crazy as that may sound, unless they are on the deed.

35% of your gross income will give you a ball park amount available for debt.
0 votes Thank Flag Link Mon Sep 3, 2012
Great question.....call me when you get a chance.......

1-617-548-7236

Carey T. Hansen

"Your Real Estate Agent today, tomorrow and into the Next Generation"



NextGen Realty

1243 Commonwealth Ave.

Allston Ma 02134

Phone: 617-548-7236

Fax : 888-875-6973

chansen@nextgenrealty.com

Licensed Real Estate Professional
0 votes Thank Flag Link Mon Sep 3, 2012
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