Can i buy the house without down payment? It's my first home.

Asked by Koppet, South Hadley, MA Tue Nov 24, 2009

I have good credit {check from website} I make money only 1600$ / mo
credit bill about 120$/mo

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5
Pat & Steve…, Agent, Westlake, OH
Mon Sep 10, 2012
I suggest that you talk to loan officers at 2 local banks, who can take personal interest in your desire to buy a home.
0 votes
Lou Mayo, Agent, Wilberham, MA
Mon Sep 10, 2012
The simple answer is maybe. What you need to do is get set up with a local lender who will take a look at your "whole" picture. There are so many programs out there that a lender may be able to fit you into.
0 votes
Ken Lambert, , Exeter, NH
Wed Nov 25, 2009
Hi Koppet- I agree with below. If you need a preapproval letter (no obligation or cost) for an FHA mortgage or a USDA Rural housing mortgage, I can help with that. Those are your cheapest ways into a house. Thanks, and good luck,

Ken L.
0 votes
Dan Chase, Home Buyer, Texas City, TX
Tue Nov 24, 2009
Don is right on the $60k loan. You might get $80k if you got a long loan with no other debt and lucky.

Remember, you only want to use about 1/3 ( I have seen 28% mentioned) of your income towards buying a house. and usually the rule of thumb is income x 3 = safe loan.
In the end the house will cost you far to much money. The roof will leak, the steps will break, the furnace will die. Hopefully not all at the same time or soon, but it will happen. If you are to tight on your finances you could find yourself unable to fix a $200 minor repair. That could make it a far more expensive repair later on.

Every year expect property taxes (arghh) and house insurance to go up. It could be a big jump.

At your income level do not listen to the term "mortgage deduction" on taxes. You do better not itemizing barring exceptional write offs. Do not trust the $8k buyers tax credit. You will not make enough to have it really help you. Check out the IRS guidelines (from the irs itself only) to see how it works. First, it only covers 10% of purchase price. Second, it is likely not to save you anything in reality because of your low income.

We have lots of foreclosures coming from 2010 to 2012. That should make prices better by 2013.

here is a simple plan for you. Nothing extreme, nothing fancy, but very difficult to do.

1 pay OFF your credit. Get rid of it completely. That increases your credit rating. It also gives you freedom to get a mortgage easier. SInce you no longer owe x you have that much more credit to be available for a mortgage.

2 buy everything cash from now on. Maybe buy some groceries or gas on a credit card just to pay them at the end of the month. It helps your credit score. If you have not found the goodwill or salvation army stores look at them. Good clothes cheap. Lots of other stuff also. But only buy what you need, nothing more.

3 stop the useless crap from eating your money. Know the difference between want and need. You need to eat supper. You want lobster. You want music cd's, you want cable tv. You want internet, You want an expensive car. A cheap car may be needed to get to work. Remove all unnecessary spending from your already small budget. That gives you more free money to 1 pay off debt with and 2 increase your down payment for a house. With any purchase you make ask the same question: do I NEED this? Could I make this at home cheaper (food and drink items).

4 if possible ( I know, not easy now) get another job to increase your income. That would give you access to a bigger mortgage AND help you to eliminate your debt. Debt is not a friend, it is your worst enemy. It can take you from owing your things to your things owning you.
There are 3 kinds of debt that are ok. 1 education, 2 car (for work) and 3 house. Those are all good debt as long as you buy everything in those categories with value in mind and not flash. Each will pay you back. The education with a good job, the car by being able to get to work, and the house by giving you shelter (not as an investment at all)

5 stop thinking of spending on things you would like. Start saving for things you want later on. This is called financial planning. the more you can save now the better your financial future will look. if you can save $1-200 a month it will add up over time. The more the better naturally.If you could save $200 a month for a year that would be $2400.
Over 3 years $100 a month would be $3,600 $200 a month would be $7,200 (not including interest). That is a nice down payment for a house your income would support. We have 7 million foreclosures to come from 2010 to 2012. By 2013 (3 years from now) prices should be much lower and you could be much more ready to buy.

When you get paid do not look at your paycheck as $1000 to pay off bills, $600 for me to play with. Look at it instead as bills suck out $1000. The rest has to be carefully managed so I can save something for the future. Once you pay off your debt your income will magically increase by that same $120 a month, what a great concept. So pay off as much as possible to get rid of that debt. Then save as much as possible to get the down payment you really need to have. I know you do not live like a rich man today. Try living like you are even poorer than you really are. That allows you to save money. In the end that same money you saved will be what helps you to buy a house as it will become your down payment. Suffer through a few years now to save for a future you really want

I never could spend and save the same dollar. I doubt you can either.
0 votes
Don Tepper, Agent, Burke, VA
Tue Nov 24, 2009
It depends on a lot of factors you haven't listed. You can get 100% financing if you're a veteran. You only need 3.5% down for FHA loans. If you do an equity-share with someone else (friend, relative, investor), they can put up the down payment in return for partial ownership of the property. However, if you make only $1,600 a month, that's only $19,200 a year. And even with good credit, you'd probably only qualify for a mortgage of about $60,000.

Check with a good mortgage broker for more information.
0 votes
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