Trying to buy my first home, have a few questions?

Trying to buy my first home, credit score of 700. Single make around $1600 a month after deductions/taxes. Anyone have any idea if I have a chance of getting approved for a home that costs $125,000 and what my monthly mortgage would approximately be? Or what I need to do in order to be approved

11 Answers

Relevance
  • 4 years ago
    Favorite Answer

    Buying a house is a step by step process, this is the first step you should take in order to purchase a house is to be pre-approved for a mortgage loan, by contacting a local mortgage lender. The rest of the steps will fall in place, no matter the type of property you are purchasing.

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage lender, you can find one in your local telephone book.

    Make sure this mortgage lender or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.

    He will fill assist you in the filing out of the mortgage loan application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay as per your credit report and the amount of your monthly income earned would be used in a formula to determine what is called a debt ratio. This debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%.

    When you speak with the mortgage loan officer you will need the following documents to complete the loan application, there will be others, but this will get you started.

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

    Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.

    Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

    You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

    What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

    So select the best option for you and your financial situation.

    You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

    The down payment of a house would depend on the mortgage loan program you are approved for.

    There are many and varied programs available to you than just the conventional mortgage loan.

    #1. Conventional mortgage loan

    Normally 5%-10% down payment.

    A. 20% down If you want to avoid Private Mortgage Insurance (PMI)

    #2.FHA mortgage loan

    Normally 3.5% down payment

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #3. VA mortgage loan

    There is no down payment

    You must have been in the United States military active duty, veteran, or retired.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #4. USDA mortgage

    There is no down payment required

    Normally to be approved for this mortgage loan the property you are purchasing must be a farm or rural property.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    I hope this has been of some benefit to you, good luck

    "FIGHT ON"

  • 4 years ago

    You don't say whether you are a military veteran or not, but if you are you could use a VA loan and have zero down payment. Your income is "net" after deductions but you should use gross monthly income when qualifying. Next best loan type would probably be an FHA loan. There are some good answers already posted. Best wishes!

    Mark @ pwrealtyservices

  • 4 years ago

    Any loan officer at any bank will sit down with you and go over the numbers at no cost and without obligation on your part. You will need to know, in addition to your financial information, an average annual cost for property taxes in the area you are looking at. That is often a big factor, because the monthly amount is part of the monthly payment a lender would allow you to have. Without knowing everything, anything you get here is just guesswork.

  • 4 years ago

    It would depend on how much down payment you are giving.

    With income of $1600. per month you could only be approved for a mortgage

    payment of $525. per month.

  • How do you think about the answers? You can sign in to vote the answer.
  • 4 years ago

    We go by your income before taxes etc are deducted. It would depend on what other debts you have if you qualify. You can call any mortgage company & ask them to see what you can be approved for. This is always free.

    Source(s): Mortgage lender 30 years.
  • Anonymous
    4 years ago

    If we gross-up your net pay you are probably paid around 2,000 per month before taxes. That would qualify you for a mortgage of between 60,000 and 72,000. If you go with an FHA loan only requiring a 3.5% down payment, that means the purchase price of the house you might qualify for would be between 62,000 to 74,000. So you would need to have 2,000-4,000 cash for a down payment. To get a 125,000 home you would need to come up with 53,000 to 65,000 cash down payment to get the loan down to an amount you can afford.

    Your credit score is okay, not terrific, but okay. What your plan should be is to continue to rent for a while, work to get your salary up to double or more of where you are now, and accumulate as much cash as you possibly can while taking steps to get your credit score up a bit. You can qualify at 700, but it helps to have that higher.

  • 4 years ago

    You sound like a good candidate for an FHA loan, but the problem is that your income is too low to get as large a loan that you will need to buy a $125k house. And the only way around that is to get a higher paying job for a couple of years or to buy the house with someone who also has good credit like you and is employed too. Consider your housing goal as an incentive to get married. For future reference you can't borrow more than 3 times your gross yearly income. I estimate you make about $23k so you either need to consider a house around $70k or find a spouse to buy the more expensive option. Hold on to the dream.

  • Anonymous
    4 years ago

    for approval, you need to go to several loan companies and banks; they will ask all kinds of questions, and you will probably need to make a few visits to them for all the info they need...........be sure to include some $$ for needed repairs

  • 4 years ago

    If your down payment is $25,000, your monthly payment on $100,000 mortgage will be around $500/month. Add property taxes and homeowners insurance and private mortgage insurance (PMI). So plan on around $700-800/month if your annual property taxes are no more than about $1000/year.

    There are mortgage calculators online. Put in amount of mortgage ($125k minus the amount of down payment you have), property taxes on the property, homeowners insurance annual premium.

    You fail to state how much down payment you have, and how much additional savings you have to cover several months of mortgage payments, moving costs, any repairs or refurbishments you will need, etc.

  • LILL
    Lv 7
    4 years ago

    Zero. The most you could qualify for based on your salary is around $60,000.00.

Still have questions? Get your answers by asking now.