How much income do you need to buy a home?

Asked by christinalevar, Wareham, MA Sun Apr 21, 2013

We bought a home that was lost to foreclosure, but it was only in my husbands name. He has a great job now making a good income. The thing is that when buy a home it will have to be in my name. Currently I am an at home mom and I am looking for employment. We are working on improving my credit scores. What salary range am I going to want to be at before we are going to seriously look into home loans? Thank you

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Rebecca Kallhoff Team’s answer
Rebecca Kall…, Agent, San Tan Valley, AZ
Mon Apr 22, 2013
Hey, Christina! How are you doing?

When was the foreclosure?
To get a loan in your name, you have to have a job for 2 years.

The salary you are going to want is going to depend on how much you are looking to spend on a home.
Also, do you have any money in the bank? I have hard money that can borrow you money, if you have a down payment...

Also, I have a lender that can usually get credit scores up in 30-90 days.

Please give me a call if you need anymore information or are interested in working with me!
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Korene L. Cl…, Mortgage Broker Or Lender, Glendale, AZ
Wed May 1, 2013
To qualify for a loan you need the following

(1) Fico or credit score above 580 but the interest is higher better interest if your FICO is above 640-- if you have credit issues, i would recommend Credit Absolute as they work with you to resolve credit issues. They have done wonders for a number of my clients.
(2) Job or work history for 2 years (there can be mitigating issues that we can work around sometimes)
(3) address history for 2 years
(4) depending on the loan program, down payment
(5) depending on your other financial obligations, sufficient income to cover your NEW housing costs, cover your current debt obligations, and sufficient income to live.
(6) depending on your debts you may need reserves or savings or assets
(7) MOST Important you need a qualified, licensed Mortgage Originator that can work with you and that works for a direct lender.
I am a Mortgage Banker in metro Phoenix, AZ. I lend in both Arizona and California where I will be pleased to help you. If you or someone you know is looking for financing options, please feel free to contact me or pass along my information. 623-340-0934 Korene Clopine-Seaman NMLS # 218520 We are Direct Lenders, WE CLOSE LOANS! Call me I will help you.
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Bianca Benne…, Agent, Glendale, AZ
Tue Apr 30, 2013
It really depends from person to person. It really depends on your credit report, savings account and actual your income.
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BParker, CPA*, , Scottsdale, AZ
Sun Apr 21, 2013
Hi Christin:

I agree with everyone answering before me: You need to talk to a lender. I happen to be one...

Basically, you are going to need to add up all your "involved" expenses and divide by .4, .45 and .5.

"Involved" expenses--those which a lender will use in calculating your "Debt-to-Income" (DTI) ratio. For example: car loan, credit cards, any other loan payments, and the payment for the new home, along with the real estate taxes, homeowners' insurance premiums and any HOA dues.

You have a somewhat unique situation, in that you are trying to buy without your spouse. So, you need to consider ALL debts which you are obligated on, even if you may think of them as your husband's, but you will not get the benefit of his income. Also, Fannie and Freddie will not require your husband's credit report to be pulled, whereas FHA in a community property state such as AZ, will, but won't require you to count his debts in the DTI calculation...THOUGHT: If feasible, may consider putting loan payments into just your husband's name and then give the lenders 30-60 days to update your credit report. NEGATIVE: Closing accounts could lower your credit score, so have your Mortgage Loan Originator run a "what-if" scenario before doing so.

Anyway, divide your total debt payments by .4 to get an idea of the minimum amount of gross income you will need. Divide it by .45 to determine the realistic minimum Fannie and Freddie Mac will want you to have or you will be turned down. Divide by .5 to determine the minimum FHA will want you to be earning. For example: say you have other loan payments of $200 and your new home payments will be $800. Divide the $1,000 by .4 = $2,500 (should be no problem); .45 = $2,250 (minimum); .5 = $2,000 (just getting by on an FHA loan).

Do not have to worry about other debts, such as life insurance premiums, food, car insurance, utilities, etc. In reality, you do want to consider ALL these other "non-involved" outflows of cash, in figuring out how much you can afford to borrow, as they may tell you to be more conservative than the lender will need you to be qualify.

Your question is labeled "Home Buying in Phoenix" even though your address shows MA. Be aware Arizona is a Community Property state, unlike MA and most other states. So, for example, while I understand the GA agent's comment below about consulting an attorney for how to hold title, and you can do so if you wish, in Arizona we use Title Companies to handle that aspect. As to how to hold title, eventually you would want to get it into "Community Property With Right of Survivorship" for advantageous tax and legal reasons (in simplest terms, you decrease your taxable gain upon disposing of the home and CPWROS makes it harder for the other person to dispose of their share of the home without your permission--sad, but it happens sometimes.)

Good for you for working on your credit scores ahead of time. See my one blog on Trulia from 2/28/13 "Credit Scores and Your Mortgage Interest Rate" to see just how much you can save the higher you achieve.

Good luck. Have fun. Bill.
NMLS #223607
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Doug McVinua, Agent, Gilbert, AZ
Sun Apr 21, 2013
Agree with the answers below that the best approach is to work together with a lender. We can connect you with a lender that does this type of work, will not charge you for this process and might have ways to bring your husband back into play.

Options are best!
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Stephanie We…, Agent, Gilbert, AZ
Sun Apr 21, 2013
You really need to start a conversation with a lender because everyone's financial fingerprint is different and there's no one answer to your question without know "specific" details and only a lender can give you that information.
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Marlene Bien…, Agent, Tallahassee, FL
Sun Apr 21, 2013
Great question, the first thing you need to do is talk to a mortgage broker that can assist you best on this. They can see what is the best option for you and what would need to be done in order for you to get to the point of buying a home. Your financial house needs to be in order first before you set foot in any home for sale. Remember your financial house is the one that determines your bargaining power. Give yourself the opportunity to acquire that knowledge. Once you have done this important step hire yourself a great buyers agent that will represent your best interest and assist you stay within your financial house. In reference to how to hold title, consult an attorney and he can best assist you on this. best of luck.
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