I'm a college student from Utah. My wife and I have been struggling to get pre-approved for a loan. We've missed a few deals because lenders don't see our work history or current employment as reliable.
We are going to house-hack a multifamily or SFR with accessory apartment for 200k or less.
We have a combined monthly income of $2500-$3000 and 15k in liquid assets. She is a 1099 contractor (Graphic Designer), but has been with the same company for 3 months and plans to stay there. I just started an internship that will go until April, so I don't have any pay stubs yet.
The lenders that we have talked to want 2 years of self-employment history to consider approving us. (She is considered to be self-employed).
We have been trying to get approved for some time. Our credit is great and we have no debt or late payments.
We are very eager to start investing and we are ready to jump at a deal, but we can't seem to get a loan.
How do we get a loan? Co-signing with our parents isn't an option right now.
Wait 24 months...no way around it for conventional/government financing.
If you're going to do a loan with FHA you're going to need 24 months of work history whether you're self employed or a Wage Earner.
Now if you're going to go with conventional financing you're going to need one year of tax returns and proof that you've been self employed for at least 2 years.
You're a Realtor that has been licensed for 4 years and you only have one 1040 that you want to use. This is acceptable under Freddie guidelines.
From the information that you have presented it looks like you're not going to be eligible until after you do your taxes next year.
A portfolio loan or Hard Money loan might be something that you can do.
I hope that this helps and have a great day Sir.
Bryce, hang in there!
I thought the old aphorism about bankers giving loans only to those who don't need them was a wive's tale until I saw it in action... as a young person trying to get a house without full time work like you I had no luck and could have used the loan and never missed a payment, versus a situation where they want to give me more loans (than I want) today....
My best tip... not all financing is through conventional means... I couple of years ago, I owner financed a property I had paid off to a credit worthy young couple and the check comes in like clock work, allowing me to collect interest (at above market rate) a first mortgage on the property for security (all done with title company and their atty prepared documents). I just did a simple 10% down, 5% interest, 15 year note, set up an escrow account... with your credit and ambition, someone may take a shot with you (I would for example, if I were looking to sell and had a place near you)...
So maybe keep an eye out for these opportunities, maybe listed, or just someone in your community, church, or neighborhood that may want to exit the daily management of the property but still retain the stream of income...
My second best tip--like above--use the 24 months to educate yourself into an uber real estate investor. You'll have time to read dozens of real estate books (many for free at the library) or purchased for a song, Plus BP forums and podcasts... You will know the market. You may have an informal real estate degree by then, too. Best of luck!
Why don't you put your creative mind to work and find a place that you do not need to get a conventional loan. Buy with owner financing, subject to, or lease option. You have some money to work with as a down payment or option deposit. If you let the banks dictate when they will lend to you, how much and how often you will find that is business is incredibly difficult! Come to some of the REIA groups here locally. I am speaking at the Utah REIA next Tuesday at 11:30 and at the new Wholesale Meetup group next Thursday evening. I am happy to chat with you about ways you can find a property to live in without getting a conventional loan. Call or email me! Good luck!
Listen to what @Jeff Rappaport said. There are a lot of ways to get into a home without conventional financing. Study up, learn, attend REIAs and you can make it happen.
Thank you all for the excellent advice! It's encouraging.
@Jeff Rappaport I attend all of the Utah REIA meetings I can, so I'll probably see you there! Thanks!
Hey Bryce, sounds like you're doing great already. Jeff's advice about seller financing or a lease option is spot on, and if you can't get conventional financing (which it sounds like that's not an option right now,) I'd pursue that. I started investing by getting an owner occupied FHA loan on a 4plex. It wasn't the most glamorous living, but it was a foot in the door! I had very little credit history, and I had to apply with 5 separate lenders before I could get qualified.
After I quit my job to go full time into real estate, I couldn't qualify for conventional loans anymore and everything has been creative financing since then. I always like to keep an eye on properties that offer seller financing for that very reason! There are a few small multifamily buildings in Utah county that are offering seller financing.
This looks like it might be a good candidate:
If you're looking for a single family home, these may work:
Getting started is a process for sure, but Bigger Pockets is a great resource and you can always message me or anyone here to get clarification on how it all works. Good luck!
@Skyler Smith Thank you for the links and the advice! I'll be on the lookout for seller financing.
After seeing all of these responses, I think I have a good idea of my next steps. I'll look for seller financing, educate myself more, and I'm sure I'll find a good deal for me soon. Thank you all.