How can I get a mortgage in this situation?

Question

I am 28 years old and I teach English in China. I plan to move back to the US in either summer or fall and I would prefer to buy a property rather than pay rent to someone else.

I have:

- a good amount for a down payment (around $40K+)

- an excellent credit score over 800

BUT:

My current and past few year salary is very low (under $20k/year) which is high in China because cost of living is much cheaper. And the job I plan to do in the US (Real Estate Agent) is 100% commission based, so I think I will be denied a mortgage from almost everywhere.

Any tips/ideas or advice on how to handle this situation??

Thank you

Michael Plante · Answer

Buy as a rental

pay the 20% down see if you qualify based upon expected rental income

Alecia Loveless · Answer

@Evan Yale you can also look for owner financing for a few years with a balloon payment after 36 or 60 months when you will refinance it with a real lender at that point. With even $20,-30,000 down if an owner is able to do this they might be interested in monthly payments for a while or even for the whole term of the mortgage.

Joseph Lane · Answer

Hi Evan

I'd say talk to a local lender. Lenders are going to be your go-to people for all real estate agents, whether for your client or for yourself. They will be able to sit down with you and go through all your finances. My advice is for you to develop a super strong relationships with the best lenders in town and stick to them like glue. Once you are an agent out in North Carolina, these lenders will be your best friends because you'll be able to refer your clients to them.

Suraj Gupta · Answer

@Evan Yale

I am a realtor in NC. It would be my pleasure to help you with your problem. For now I suggest you go the rental property way. Buy an income generating MFH and get a loan based on the income itself. You will get 2 birds with 1 stone. Have a house as well as start off as an investor. Good luck!

-Sg

Anna Laud · Answer

@Evan Yale

Hi Evan!

It’s going to be really based on your DTI (debt to income ratio) and the property you’re trying to finance - $40K as a down payment can in some areas be a 50% down payment which is great and your income should be offset by this %, in other areas/purchase price this is going to be closer to 20% down, so I would get a clearer idea of where you’re going and what type of purchase price you’ll be looking at first.

For low income OR low credit score a government backed FHA loan may work. These loans are guaranteed by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development (HUD).

These loans typically have less strict lending requirements- lower income included

With an FHA loan, it’s often less than 4% down on your home purchase, even with a credit score less than 600 in some cases - which doesn’t apply to you in terms of low credit score or down payment but does cover your basis for lower income.

If you were to be in the market for a ‘fixer upper’ and getting into the world of REI (thinking ahead to using this as an investment/house hacking down the line) The Good Neighbor Next Door loan is another one that could work for you as a  teacher (even if you worked part time and taught even a co-teaching half time schedule to maintain teaching status- I would verify that with a lender and still obtained real estate license (I can try to help you connect with some if you’d like) but for you specifically as some lenders you won’t be able to qualify with a commission based (potential at that for now) income for two years (two years of tax returns) in a lot of cases.

https://www.hud.gov/program_offices/housing/sfh/reo/goodn/gnndabot

Along these same lines a Homestyle loan product may work for you too, having a decent down payment and great credit score. There would be (again, depending on purchase price) be no PMI with your down payment size as a % base ‘offset’ to the loan size  and you might be able to take a smaller ‘as it’ property and use these borrowed funds for rehabbing to more of your end user needs.

Hope that helps!

How can I get a mortgage in this situation?

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