I just got rejected by Chase because of low income now what ?

Question

Hey Guys,

First post on Bigger Pockets, been lurking on podcasts and what not.

Anywho, I just graduated college have an accounting degree making about 45K in NYC (kinda low but working on CPA). Anywho I have about 350K saved / inherited and I want to purchase RealEstate in Brooklyn. Mainly trying to do a simple house hack.

Not even aiming to break even just trying to convert my rent payments into mortgage payments.

The main problem is that I tried to get a mortgage at Chase today and got "rejected" or the amount they could lend me wasn't enough.

What should I do from here?

Here's what I thought of so far:

Go talk to other banks?

Private lenders is kinda outta the question, don't really know any rich people who will lend me money?

Yup at this point just throw ideas at my and see if I missed something.

Thanks,

Dennis M. · Answer

Increase your w2 income . There’s a reason we save for along time to get into this business . It doesn’t happen overnight son

Jason Lee · Answer

Lenders qualify you by looking at your housing debt-to-income and total debt-to-income. So as others have mentioned you are limited by your income, not your savings. With 45K salary the max monthly amount a lender will want you spending on housing (mortgage, RE tax, and insurance) would be around $1500. If you're looking at a 1M property with 700K mortgage the monthly housing expense is probably going to be more like $4000. That means you'd need income of at least 120K. A good mortgage broker or banker would have explained all of this to you (which is why I always discourage clients from going through 800 numbers, websites, or branches). Get a strong referral.

On the bright side you've got good savings (more than many of my first time buyer clients), your income is sure to increase, and you're trying to start this young!

Russell Brazil · Answer

Yup...just like Dennis said here.

When I was in my 20s, I had 3 focuses.....increasing my income, saving, and eliminating debt.

George W. · Answer

My advice is to jump the bridge & move out to New Jersey. With the cash you have on hand you could probably flat out buy a place out here.

Donte Jones · Answer

@Yomato Ugo Banks usually loan 3 times your earning for a mortgage. If you are seeking 700k minimum with generating 45k (x3), that is the reason for the rejection. Even making 80k wouldn't get you 700k. You would be looking at 233k/yr for 700k. I would connect with some members on here in the Bk-Ny area and pitch what you are trying to do. The advantage is that you do have some accessible funds.

Yomato Ugo · Answer

@Donte Jones

Thanks for this info

Joe P. · Answer

Man, I wish I could get an inheritance like that. :D

A couple of thoughts, a few out of the box.

• Can you work remotely for this job, or any job in your field?
• Are you willing to move to a cheaper area and live there?

It doesn't sound fun, but if I could convince early 20s Joe, I would have told him to take some cash, buy a place, and househack it. And do it in an area that could potentially see some growth.

If you company allows you to work remotely, I'd look to move to a much cheaper area and find a property that could deliver you some value -- low price point, high ARV, opportunity to improve, etc.

Then you could work from home, househack, and have someone covering your living expenses while you also drastically reduce your transportation costs.

Your 45k salary will cover the essentials and some good times for a young kid -- max your 401k and any other needs -- and the rest goes into your investments. You've got the cash laying around that as you get the hang of the business, you can start to expand. Make sure that inheritance is, at the very least, in a high-interest savings account or CD.

Theresa Harris · Answer

As Donte said, usually they will lend you 3 times your income.  In this case you have $350K you can use as a down payment (which is a lot of money for a recent grad) and would need to borrow $350K.  You can try going to other banks, but with an income of $45K, you probably won't find anyone willing to lend you the amount that you want.

Yomato Ugo · Answer

@Corey Hawkinson

I'm seeking about 700K minimum since I'm putting down 30% which is 10% more than the 20% down on the conventional loan. (Tell me if I'm missing something and sound like an idiot lol)

Anywho, yea the reason I got rejected was because of income being too low. I think to get approved I should make around 80K which is pretty obtainable.

Corey Hawkinson · Answer

@Yomato Ugo Did you ask them why you got rejected? Did they say anything about what you could change to eventually get approved? That’s where I would start.

You can also talk to several banks. Others might have a different answer. What loan amount are you seeking?

I just got rejected by Chase because of low income now what ?

Most Popular Reply