Mortgage Approval Question

10 Replies

Hello All,

Recently graduated college and looking to kick off my real estate investing career. I am trying to figure out how much of conventional mortgage I will be able to get approved for. Heres my situation...

I got my first post grad full time job starting in late August in Charlotte, NC. I'll be making 55k/year locked in for two years. The third year I will be making 25%-50% higher base salary plus commissions. 

I have 27k in student loans. Repayment, as of right now is $300/month for 10 years but I will most likely pay it off quicker.

My rent is roughly $700/month including utilities, wifi, etc.

I currently have about 15k in liquid assets/cash equivalents and then about 8k in less liquid assets (Mutual funds/Crypto). 

My other expenses are very minimal as I am being very frugal for the foreseeable future.

I don't start working until late august but i am trying to start my real estate investing career as quickly as possible. So my question is approximately how much of a mortgage will i be able to be approved for if i am putting 20% down and the property is strictly an investment property? The property will most likely be a duplex/triplex and FHA is out of the question, as I am locked into a one year lease.

Also, any tips on getting started are welcome. 

@Jacob Camilliere first off if you do a duplex, triplex, etc it’ll likely be 25 percent down.

At 55k a year you make 4583 dollars a month and have 300 dollars a month in debt service. Most lenders will roughly let you go up to 35-40 percent DTI. So if that’s the case, assuming a rate of 5.5 percent for 30 year fixed loan your max monthly payment can be around 1533. Now this will likely also have to include your taxes and insurance which I won’t know what that would he.

If it’s just your Principle and interest then at 25 percent down your max loan amount assuming the interest rate above would be around 270k.

Hope this helps

@Jacob Camilliere you’ll want to confirm with a loan officer as the 270k payment doesn’t include insurance or taxes. But yes in that price range I am guessing you should be fine.

I would recommend not maxing out your buying power on one purchase though.

Good luck !

Hi @Jacob Camilliere I just saw this post. I would highly recommend talking to a lender before you go much farther. They would be the best ones to talk to about your options, how much you could afford, what programs you might be eligible for (free money!). And talking to a lender is free but will give you a much clearer picture of your situation. I have a relationship with a lender here in Charlotte who is amazing!

Also, I know you have the lease but don't be so quick to dismiss the FHA. It is an amazing program; only having to put 3.5% down instead of 25% is a huge win. That frees up a lot of capital to either renovate or buy a second property. Use the leverage if you can! If you have to wait a year and save up in order to take advantage of that, would it be such a bad thing? Or how much would it cost to break your lease? Could you afford that if the right deal and financing came along?

Just some food for thought. I'd be happy to help in your search for a property (I'm a broker with Keller Williams) or message me and I can give you my lender's info. 

@Laura Yates I agree that talking to a lender is the next best step. Even if @jacob isn’t ready for a hard credit check, your lender can be a huge resource, so it’s never too early to reach out! I was looking at sIngle famIly homes with a standard morgtage previously, but I recently had a quadplex opportunity brought to me and am interested in learning more about the FHA loans and alternative options to keep cash available. Assuming your lender is in the Charlotte area, I could use a second opinion!

Similar to what everyone else has been talking about, try to get pre-qualified before you go any further. I suggest finding a local bank in the area you are looking to invest in and getting pre-qualified with them. That way, when they come back with a response, you are better able to negotiate with them as they are smaller and you will be investing in their backyard.

Also, Your rent+utilities is only $700 / month? WOW I am paying around $1300 in Charlotte

Honestly, just talk to a mortgage broker and try to get pre-approved before you even start doing anything. That'll tell you where you stand. 

FYI, if you're in Charlotte, I would start with a Credit Union first, and then a mortgage-dedicated company. (Caution: stay away from big banks) The most thorough company is Movement Mortgage, they're good, but they're one of the most conservative and may not jive with your youth and investment strategy. Talk to mortgage companies around town that do investment lending and see who is willing to do it. 

Also, your credit should only be affected the first time, after that I think you have 30 or 60 days to pull as many reports/credit checks as you want to find the best deal, so don't be shy about that.