Anyone having financing trouble right now?

Question

Hey everyone,

Looking for some advice. My girlfriend and I are currently looking to purchase a 3 to 4 unit under $300k and am wondering what kind of road blocks we’ll be heading into finance-wise.

Our situation currently is, we are house hacking a condo. Besides the very little i do personally pay for the condo, the only other items I have under my credit are my car and about $18k in credit card debt. We have $20k for a down payment and want to have $10k in reserves before we pull the trigger. I have a 740 credit score and between the two of us, we make about $150k per year.

Does anyone think we’ll run into issues with financing seeing how I already own a condo?? Or any other issues anyone can think of?

Any advice would be greatly appreciated!

Colleen F. · Answer

You have 18 thousand in Credit Card debt. Might be an issue.  Also do you have a car payment.?  and if you are buying with your girlfriend what is her debt?  They look at Debt to Income.  If it is the two of you it will be both your debt and both your income and the lower of the two credit scores.

Would you live in the new property? If you won't live there you will need 20% down.  How far is the new property from the condo?  That will factor in to whether it is a second residence if you decide to live there. (or it could be GF primary)  Why don't you talk to a lender to see what you qualify for based on how you structure it. There is are alot of different ways to structure it and its unclear what you are proposing.

Account Closed · Answer

ONLY other items are a car AND 18k in credit card debt?? That is A LOT of debt and you need to change your attitude on debt before moving forward.

Also it doesn't matter how much you pay for the condo, it matters how much you are responsible for, if you are on the mortgage for 1k a month you can't tell the bank "oh my girlfriend pays for half" they will look at the entire 1k as a part of your DTI. You both might be on both mortgages but it is something to consider.

James McCard · Answer

My advice is to talk to @Kit Crowne in addition to being the generous host of our Manchester meetup he is a wealth of knowledge when it comes to financing. He does all my mortgages for me, I won't use anyone else... sorry not sorry lol

Mat O'Grady · Answer

@Tim James R. Some trouble I ran into when starting was not counting the rent from my properties until I was a landlord for two years. The effect was that my DTI was higher because they didn't count my rental income. It is usually free for the initial application at a bank for a loan. If I was in your position, I would call around to local banks and see what types of loans they are currently offering. If you are looking to buy an investment property, tell them that is what you are looking for and ask them about their terms and conditions. If it sounds good to you, apply and see what they say. Keep calling around and looking for bank until you find one with something you like and who will approve you.

Tim James R. · Answer

@Stephanie P. A lot of things to think about. Thank you for the tips!

Tim James R. · Answer

@Sant Li This was very helpful! Thank you for taking the time. Cheers!

Stephanie P. · Answer

Hey @Tim James R

Occupancy fraud is the largest incidence of fraud in the US.  Underwriters scour files looking for it and look at things like when you purchased the last house and the square footage. Most people don't go backwards in square footage until they're ready to "downsize" and most people don't want to live in a duplex or multi family if they are already used to living in a single family.  That might not affect you given you're living in a condo right now, but if you're looking to make the 3-4 unit property an owner occupied property, those are things to consider.  I assume you're trying to go owner occupied because of the limited cash you're bringing into the transaction.  Minimum ltv on a multi family for owner occupied through Fannie Mae is 75%.  That means on a 300K property, you're looking at $75,000 down plus closing costs.

If you go with a Fannie Mae Home Ready loan, that may work, but there are income restrictions.  Definitely something to look at.

Best of luck

Stephanie

Anyone having financing trouble right now?

Most Popular Reply