Can I buy a home with 0 down if my credit is great but my debt-to-income ratio is around 44%?

Asked by Alacea, River Falls, WI Sat Nov 21, 2009

Income is 34K annually and my max house price is about 109,000.

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Dan Chase, Home Buyer, Texas City, TX
Sat Nov 21, 2009
34 x 3 = 102 No way you should try for more.

My real concern is not your being able to get a mortgage. It is about living with one. If you already have a 44% dti what will it come with a mortgage? Could it be 60 or even 70%? That is financial suicide. Almost a guarantee you will lose a house if you try. Remember, things happen to houses. Roofs leak, furnaces die, steps break, and taxes and insurance go up. When that happens how can you handle that extra little expense? It sounds like it would not be possible.

You might be able to get a 0% down loan. You might be able to get financing at a reasonable fixed rate. But it would not take much for you to lose that same house if anything at all major happened to your finances. Please reconsider, pay off your debts. Get to a better dti level and then look at buying a house. It is better to rent a house safely than to buy one with great risk and lose it to foreclosure.
1 vote
Dan Chase, Home Buyer, Texas City, TX
Sun Nov 22, 2009
Alacea, I am surprised that with a masters degree you would only be making $34k a year. I know it is a tough job market out there today. Could you find another job with your education that would pay you $50k or more? If so that could change your DTI numbers completely.

Or have I misread and you are studying for a masters degree? If so you are very likely to have it pay off very well once you graduate.

I know, some areas (location and area of expertise) either pay very little or have so many people who trained for them that the competition for jobs has brought down wages. If you start to look for another job that could bring your income up to more realistic (for your educational costs) wages it would likely be your best option. I would go to either the unemployment office OR your college career center and ask what things you can do with your career. If the college will not help for free the unemployment office will.

Remember, just because you have a degree that says "A" does not mean you are not capable of doing or wanted for "B,C,& D" also. A lot of companies always thought masters degrees were great even if not in the exact area that the job title implies. Although in this economy, it may take awhile to find something I am sure you will have opportunities if you simply look for them.
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Debra (Debbi…, Agent, Livingston, NJ
Sun Nov 22, 2009
Alacea, If you could get a loan, while your monthly payment might be lower than rent, that doesn't factor in the real cost of owning a home. Add to that little or no savings......that's where I am fearful for you.

So............You are getting your masters degree...that's terrific - ..good for you!

It will certainly be worthwhile in the end.......... you will take care of your student loan debt, and be able to move forward with a higher salary, I am sure, and less pressure on you financially.. I applaud you for looking into home ownership, and doing some due dilligence, rather than just jumping in, and regretting it later. Once you have all the facts, you will make the decison that is right for you.

I think you're going to do just fine in the future!!

Best wishes ..............
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Alacea, Home Buyer, River Falls, WI
Sun Nov 22, 2009
Well. I certainly hope that getting my Master's degree and taking out student loans in order to do that wasn't a bad idea. Thanks for the cuttingly honest advice.
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James Gordon…, Agent, Hamilton, OH
Sun Nov 22, 2009
Alacea if your DTI is counting your current rent you could get a USDA loan. There ae specific areas that the home has to be in but it is no money down and no monthly pmi. I have helped prople purchase homes with this program in the past and normally the monthly payment is less than the rent that they are paying.
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Debra (Debbi…, Agent, Livingston, NJ
Sat Nov 21, 2009
I have to jump in and agree totally with Dan.....just because you might be able to get a loan, doesn't mean you should. (truthfully, shame on any institution giving 0% loans these days - haven't we learned anything?)

There is a lot more to owning a home than just payingf the taxes and mortgage. There is no super to call when something breaks. What if you have a personal emergency? What would you do if you had to come up with $3000 for a new furnace? Put it on a credit card? Not a good idea!

Your numbers , in my opinion, are too tight to even consider putting yourself further in debt.
Work on saving money and paying off your current debt, otherwise you will be walking on very thin financial ice.

Good luck......and best wishes..........
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