San Francisco, CA · Member since 2015 · 3 posts · 1 vote
I am looking to purchase my first property in San Diego. Ideally a Duplex so I can live in one unit with my partner while renting the other. I've accumulated a substantial nest egg after college and paid off all student loan debt. As it stands My DTI is at 68% In order to qualify for the loan amount I'm seeking, I need to bring that down to 48%. My partner provides stable income that would get my DTI in range. However they are not a part of the loan deal. The lender suggests asking a parent to co-sign.
Which leads me to my question. I intend to approach my mom, with an offer for % equity in exchange for a co-sign on the 30 yr loan. I’m a fiscally responsible, and just shy of gaining approval on my own. She is in a strong & stable position to easily increase my purchasing power. What % equity on your first investment property would you offer your mom?
Just to clarify - your mom is not bringing any equity in the form of part of the down payment, correct? They are just on the hook if you happen to default on the mortgage?
Hard to say to be honest. Probably not more than 10% if all she's bringing is stability to make a lender happy. But also it's your mom, and while real estate is a numbers game sometimes its better to do good by family. As long as you're both happy with it (and your mom doesn't feel insulted by whatever you offer her), you should be good to go.
Just to clarify - your mom is not bringing any equity in the form of part of the down payment, correct? They are just on the hook if you happen to default on the mortgage?
Hard to say to be honest. Probably not more than 10% if all she's bringing is stability to make a lender happy. But also it's your mom, and while real estate is a numbers game sometimes its better to do good by family. As long as you're both happy with it (and your mom doesn't feel insulted by whatever you offer her), you should be good to go.
@Anthony Saunders Hi, so when I really got serious and decided to crack down on this investment plan I sat down and checked my DTI. I don't remember what exactly it was at that time. But I had 2 car payments, mortgage, small signature loan etc. So, I decided before I did anything I would get my DTI in better standing. Started off by selling 12 of my cars (most were drift/race cars and project cars) including the 2 I was making payments on. That was painful as I am somewhat of a car enthusiast lol. Then used proceeds to help pay off the signature loan and whatever other items I had. At last check, my DTI is below 18%.
So, if you have the substantial nest egg and are in a position to clear some percentage points on that DTI, that's where I would look. If that's possible without depleting it or not giving you an emergency fund etc. then, if the DTI was your only issue, perhaps mom wouldn't be needed.
If you decide that having mom on there would be the way to go, as long as you don’t have a mother like mine, then go for it!
Yes, she did agree to cosign. However, I determined that the lender had misinformation related to my income. Once we reran the numbers my DTI was perfectly in range and I could qualify for the loan independently.