I have excellent credit and cash for a down payment but very low income because I have returned to graduate

Asked by Marc, Columbus, OH Fri Jul 4, 2008

school. I previously owned my own home. I am thinking about buying a double that would serve as primary residence and provide rental income. From what I am seeing in the listings it does not seem impossible to find a property that will provide enough income to cover a large share of the mortgage. But will anybody give me a loan based on that, given my extremely low income?


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Cameron Piper, Agent, Forest Lake, MN
Fri Jul 4, 2008

My experience has been that there isn't a program like that (This is where the experienced loan officer with the miracle program jumps in with a correction to my ignorance).

My advice however is not purchase anything at all (gasp, a realtor said don't buy a house). Take the time while you are in grad school to live cheap and save a down payment. When you are out of school and have saved up money, you will be able to put a bunch of money down or even pay cash for a house to live in.

Buying a house with low income is never a good idea. What happens when the renter doesn't pay on time but you still have to send the mortgage check. What happens after a few months when they stop paying altogether and you have to evict them. There is no safety net there for you and you will be back here asking us how to do a short sale or worse what the foreclosure process looks like.

I know that the media has been all doom and gloom about real estate and that now more than ever there are a bunch of real estate gurus on infomercials telling you that now is the time to make your real estate fortune. Stop listening and know that there are deals in every market. It is simply harder to find them in a sellers market.

Your patience now will position you for a much brighter future in real estate.

Cameron Piper
Web Reference:  http://www.campiper.com
3 votes
Bob McClure, Other Pro, Walled Lake, MI
Thu Jul 24, 2008
try this !.....do you have parents that would go on the home and loan with you?.if so...use your $ and blend your income and credit with their's.....you now have a new math problem.....fha allows parents to be "non-occupant" coborrowers......it will work for a duplex also....bob mcclure- mortgage now- farmington, michigan (248) 806-0366.....i am licensed in ohio
0 votes
Brent Bester, , Columbus, OH
Sun Jul 13, 2008

To be brutally honest, it's going to be hard to obtain a loan if not impossible in this market with very loan income. You might be able do do a "stated loan" in which the broker inflates your income to get you qualified but it might cause more damage and you have to have 10-20% down. If you making 10K a year and trying to buy a property I would forget about it. Banks want to see concrete numbers on paper, I know this because I work for a major one in columbus. Either way you would probably need 20-10% as a downpayment even going through a broker. It all depends on what your income actually is vs. your debt and if you can provide enough capital to qualify for a mortgage. I don't do "stated" loans because I dont believe in them and it's the same reason most lenders have retracted from funding them. The mortgage crisis right now and all of the foreclousures have alot to do with "stated" loans. Stay away from them. Save your money, when you get out of gradschool you will hopefully be making enough revenue to purchase a home with honest proven income. Best wises.

Brent Bester
Mortgage Professional
0 votes
Don Bush Team, , Columbus, OH
Sun Jul 6, 2008
You sound like you are in good shape to buy. Start with a Mortgage Loan Officer, then get a competent Investment Realtor Specialist.
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Jul 4, 2008
if you work positively in concert with your real estate agent and mortgage broker I am assured you will have solutions to all of your questions resolved. Good luck http://www.lynn911.com
0 votes
Susan Wesely, , Saint Paul, MN
Fri Jul 4, 2008
Marc - You've received good advice from others in response to this question. One additional piece - if you decide to purchase, try to find a property that will not use up all your cash in the purchase process. If you can keep enough to cover a couple month's of mortgage payment, you will still have a safety net to deal with any of the potential problems that Cameron mentioned. Best of luck!
0 votes
Jason Braddo…, , 44266
Fri Jul 4, 2008
I like Cameron's advice. It is possible to get a loan, but you most likely would have to go through an experienced mortgage broker rather than a bank. In my experience mortgage brokers have more private investing opportunities that may lend to you, but with limited income I still wouldn't recommend it. That's where the 5-year ARM programs got our country into a big problem these last few years. If you can find a cheap house near the grad school to purchase with cash and a small loan, and have some friends in grad school that would want to share the house with you instead of having separate units that may be a good way to do it too. You would look be looking at making this house a long term rental property for yourself to manage. Just a thought.
0 votes
Fri Jul 4, 2008

There may be a program available to you, although Cameron gave you some good advice. Send me an email of the potential address and I will see if the property is located in an area that will qualify for the type of financing that you inquired about. My email address is Tino.Muratore@gmail.com.

Thank you,

Tino Muratore
0 votes
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