Need FHA Loan. Where to begin?

15 Replies

Hello BP I'm in the beginning stages of preparing to buy my first property. My wife and I want to purchase a MFH here in Colorado.

I just figured before I start shopping around for lenders I could check on here to see if I could work with a fellow BP member

I don't have a very long credit history but I'm 100% on time with a score in the 700's. My wife has a shorter credit history with a score in the mid-high 600's but also 100% on time. I'm 23 and she's 21.

I work as a poker dealer(tipped position) in Black Hawk, CO. I've been in school for dealing and actively dealing for 23 months and I'm coming up on my 2nd tax return for it. My wife works in the food industry as a server and she's been doing that for quite awhile. Our gross income is typically around 5k per month with our only debt coming from a car payment of $224.

I'm looking at the Grand Junction, Montrose, Delta, CO areas because they have much more affordable housing with better potential cash flow compared to the Denver area. I'm 100% open to advice and ideas. Thank you all very much for the help!

Contact Colorado State Bank and Trust. Just Google the number for the Denver. I've used them for my last 4 mortgages in Colorado. Get your W2s from last year, and the following from the last 3 months. Bank statements and paystubs. You'll have to prove income, so if you aren't claiming tips you may have a tough time. Standard s for FHA loans are a bit easier. CSBT is really good to work with in my experience. Good luck.

@Joshua Meyers If I were you, I would probably claim tips for you and your wife, yes, i know, you will be paying a bunch of taxes, but this will help your fha being approved also. Also, I have been reading about buying a 4-plex (4 unit), renting the 3 and house hacking one unit. As I understand, all rents are considered to be part of your income, in a way or two, so if you live rent free with an occasional handyman work, i think that will work out best for you, being 23 & 21.  If rents reach or exceed 85%, then you will be approved for the fha self sufficiency thing. 3.5% is your down payment.

@Manolo D.

My job makes me claim 100% of my tips which is good for getting a loan. There are lots of properties out there that make the 85% rule but not necessarily cash flow. It's nice to know that the banks will consider the rental income though. Thanks for your input!

@Joshua Meyers welcome. Not sure how you will go FHA on a property on the Western Slope and still keep your job. FHA requires owner occupied. Your job is in Black Hawk and that's a pretty hefty commute from Grand Junction. If you decide to change careers and move to GJ then that will impact your borrowing capability. Perhaps I'm missing something about your plan so you might want to fill in the details a bit more.

I'd highly suggest asking about FHA 203K loans too if your building needs any upgrading or repairs. Even if you just want to redo the kitchen and bath's flooring. You can get contractors out there to do it for you and roll it up into your loan. This is an amazing option if you don't want to swing any hammers.

@Bill S.

I considered that! I only work 2-3 days per week(poker is fairly lucrative) so I plan to travel over here and stay in the Ameristar hotel and then drive back. I remember reading the regulations on FHA and I'm pretty sure there's a % of every week that you have to be home. Not only that but my wife will also be living there round the clock so I believe that counts as owner occupied.

Even if we took her income off the loan underwriting, I'm still around 4K by myself which at 28% allows for a $1100ish payment which is within what I'm shooting for. This doesn't include the rental income either. Hopefully this plan will work. What are your thoughts?

Please remember the rental income is not calculated at 100% of the potential rents. The calculations used are based on subject comparisons. This is an added appraisal form, to be added as an additional cost. It is required by the lender per FHA guidelines, since you are attempting to use rental income as a qualifying factor.

Because FHA loans are insured by the government, they have easier credit qualifying guidelines than most lenders, as well as relatively low closing costs and down payment requirements.With an FHA loan, your down payment can be as low as 3.5% of the purchase price, assuming you have at least a 580 credit score. And closing costs can be bundled with the loan. In other words, you don't need much cash to close.

If you can qualify without using the rental income, it will simplify your loan. But, from experience, you may have a very difficult time convincing an underwriter that you are going to commute that far every week when this is your primary residence. Not saying you won't be able to but it may be difficult.

You must have a steady employment history or worked for the same employer for the past two years. Also, an FHA loan requires that a property meet certain minimum standards at appraisal. There are maximum mortgage limits for FHA loans that vary by state and county. Conventional loans also allow you to count home price appreciation toward obtaining the needed equity. But FHA mortgages do not.

I would also recommend comparing your loan options if you haven't already. A 5% down conventional loan with a local downpayment assistance program (if there is one in your area) could actually be more cost effective.  I would talk to credit unions in the area too.   Interview a handful of lenders, not necessarily for rates (which will be pretty uniform) but to find a loan officer who is willing to work with you and your situation to find the best option and will be available and prompt during your purchase.  I have some rockstar lenders here in Denver who could work with you, let me know if you need help finding someone. Good luck!

The Federal Housing Administration (FHA) offers special loans to help both low- and moderate-income families purchase housing. All FHA loans are federally backed and all FHA lenders have been approved by the federal government to service the loans. When compared to other types of mortgages, an FHA loan is especially affordable and easy to qualify for, making them a great choice for people and families who have a limited budget or a tarnished credit history.