How to get approved with a REALLY low income?

8 Replies

BACKGROUND:
Hello! I'm a junior in college with a really low, all Stafford subsidized student loan burden ($6,000 which I will pay in a lump sum at the very end of my grace period). I found out about personal finance in April 2019 and had maxed my Roth IRA by July 2019. My money comes from wages working at the front desk in a library, tutoring students, and stipends for performing undergraduate research. I've been saving since middle school, so in sum I have $10k in liquid money even though my actual income is $13k/year. My family is middle class, but my college is generous with financial aid so my parents pay the difference. I live extremely cheaply with two roommates, no overpriced meal plan, the AC is off 99% of the time so my expenses are $800/month (though my parents pay for rent...$300/month out of my own pocket including utilities and groceries mostly). If I want something I save and pay with cash, so I'm not depriving myself no worries lol. My credit score is 749--I use it to buy something cheap and random on the first day of each month and immediately pay it off. Also--I maintain a 3.9 GPA in Biology and intend to do real estate as a second job, so I'm not neglecting school or anything by thinking about this.

SPECIFIC QUESTION:

I'd like to house hack (until August 2021, then move out and rent) in the area near my college using an FHA loan, but keep getting pre-disqualified due to my low income despite having the sufficient downpayment. The houses I'm looking at are multifamilies costing around $250,000, though I'm not currently fixed on one specific property. I reached out to a few sellers on Zillow but was ignored.I have so few expenses that I can actually afford the mortgage payments, but it has become clear that I have a credibility problem. Coming here to ask for advice.

1. How do I improve my credibility to investors for someone to take a chance on me? In theory I could ask my parents, but they've supported me so much in my life already that I don't want them to take on this risk.

2. There's a real estate community where I am (St. Louis), but their meetings and programming are not accessible to me--advice?


3. Finally I'm just curious as to what people would suggest for a college investor like myself. How am I doing? What did you wish you knew? etc. 

If anything in my post is unclear I'd be happy to clarify or provide more information. I'm also not fixated on doing FHA, but I just don't see any other way of funding the home at my down payment percentage.

Thank you for reading.

One option is to have your parents join you on the loan as a cosigner. Now, there's obviously lots of asterisks with this since some lenders may not allow a non-occupant cosigner, parents obviously may not be willing to do it, etc. Depending on how the numbers work out, you may be able to split any future profit/cashflow with them and "partner" on the deal. 

It's tough to accomplish what you want with low income, but it's not impossible. I wish I had this thinking when I was in college so you're on the right track. Some things I would tell my younger self (or you in this case)

See if you can find a seller who is willing to do seller finance. You already live in a place and have roommates so use their rent as part of the mortgage. See if your parents will put money down as a down payment and split the equity with them. As a college kid, you have to find a way to make value. You don't have to have money for that. Think of what you do have (time maybe) and figure out a way to leverage it for someone who has money. 

Call landlords on Zillow or Craiglist and  network. Honestly not having money can be seen as a blessing because you will have the basics and your process down already for when you do start to make money. Good luck!

Originally posted by @Hunter Ambos :

One option is to have your parents join you on the loan as a cosigner. Now, there's obviously lots of asterisks with this since some lenders may not allow a non-occupant cosigner, parents obviously may not be willing to do it, etc. Depending on how the numbers work out, you may be able to split any future profit/cashflow with them and "partner" on the deal. 

Thank you for your reply! I will draft more information for them and see if they'd be willing to cosign. Can't hurt to ask

 

Originally posted by @Effram Barrett :

It's tough to accomplish what you want with low income, but it's not impossible. I wish I had this thinking when I was in college so you're on the right track. Some things I would tell my younger self (or you in this case)

See if you can find a seller who is willing to do seller finance. You already live in a place and have roommates so use their rent as part of the mortgage. See if your parents will put money down as a down payment and split the equity with them. As a college kid, you have to find a way to make value. You don't have to have money for that. Think of what you do have (time maybe) and figure out a way to leverage it for someone who has money. 

Call landlords on Zillow or Craiglist and  network. Honestly not having money can be seen as a blessing because you will have the basics and your process down already for when you do start to make money. Good luck!

Thank you for your reply! That's flattering.

I'm sorry I wasn't quite clear--I live in a rented apartment with my two roommates, so their rent money doesn't go to me. Funny enough, our landlord is actually house hacking on the floor beneath us!

I'll definitely go that route and try to leverage my free time. So far I haven't done any paperwork, but a book on house hacking is on its way to me (ordered online). Thank you again :)

 

Account Closed I wish you all the best. Did you know there are several LL and REI groups in St. Louis, some of of them do not require you to be a current owner or investor? You can find out about them on Google. You did mention in your post that REI networking is not accessible to you. Why do you say that?

Originally posted by @Bjorn Ahlblad :

@Keirah J. I wish you all the best. Did you know there are several LL and REI groups in St. Louis, some of of them do not require you to be a current owner or investor? You can find out about them on Google. You did mention in your post that REI networking is not accessible to you. Why do you say that?

 Hello! Thank you for your message. I have heard of a few groups in STL and connect with them on facebook.


I currently do not drive. This is mostly due to my own prerogative. I went to a residential highschool and couldn't afford a car at that time, so I just never got a license. I use public transportation when I need to leave campus/the immediate surrounding area, but STL public transport is quite limited and does not route well to the places the REI tends to meet