I’m 24 years old and I’m trying to buy my first house hack. I have a full time job of 4 years and I make about 50k a year, I have 25k to put down. I’m looking for any advice and help to find something and get approved. I talked to a mortgage consultant who is a family friend and he seems to think I’m far away from being ready to buy. I’d appreciate all the help I can get. Thank you
That's a decent down payment. Why did he say you were far from buying a house? Credit score?
Didn’t seem to think I made enough to afford the mortgage on my own. Credit score is above average. Im going to talk to another mortgage consultant hopefully next week.
What kind of place are you looking to buy? A $400k duplex on a $50k salary is a pretty big DTI.
That is a big DTI, I'd probably be more in the $250-$300k range. I feel like that is still a big DTI and there's not much out there for that.
I’m looking to buy a duplex, nothing fancy.
@Jacob Rodrigues - use FHA to buy a “too big for just you house” and rent out rooms. I bought a 5/3 at 25 and got paid $500/mo to live in my own house.
I’ve thought about that, if I went that route could I use the rental income from renting out the rooms to help get approved for a loan? I’m extremely new to all of this and still learning so I might have some stupid questions.
If you buy a small multifamily, they’ll count some expected income from rents, but the purchasing power you’d get for renting out half a duplex will be pretty small. I would be surprised if a lender would give you any consideration for renting out rooms in a house. I do like that approach, though, and you’re more likely to find something you can get approved for. If you’re creative, you may even be able to buy a 3-bedroom and rent out all 3 bedrooms while still living there. (In the garage? Living room?)
@Jacob Rodrigues , welcome to BP and welcome to the forums. I am 6 months new here and have asked a lot of questions. Some of them are stupid, but you know what I don't care. I strive and thrive on learning. If someone can save you from a headache then the questions was worth it.
With your down payment and income I do not think you will have to hard a time qualifying for an FHA loan. You could do like @Natalie Schanne did. Howev,er I've done the roommate thing in college. Not interested in that route.
If your looking in Sac market that area is pretty hot. If you need help reach out to @Wes Blackwell , he the man! 3.5% down payment would get you into a 700K property. However its not as easy at that. Keep looking for deals! I would look at possibly getting into triplex or fouplex for the same money. Enjoy the Jouney
@Jacob Rodrigues @Jeremy Brown - As far as I know, no lender will let you include room rental income as part of your purchasing power. If you buy a multi family, 50-70% of the expected or current unit rent from the other unit can go straight towards your PITI.
I liked room rental at the edge of my theoretical borrowing limits because it got me into a really nice neighborhood. As a 24 year old working in Sacramento after studying engineering at the University of California Berkeley, I stayed for $550/mo in Rancho Cordova, all included in a furnished room in a 30-something lady’s twin house (shared a wall with another owners house). Making 63k and paying 6k in rent allowed me to save and travel extensively (Went to to Egypt, Australia, etc.). 18 months after graduating from Berkeley, I bought my 5/3 house in DC suburbs - Virginia and I was making $70k+ and collecting $2600 rent to pay 2000 rent (1500 piti on 255k house) and utilities. In NOVA, duplexes don’t really exist. So you either share your super nice kitchen and laundry or don’t use this house hacking strategy.
Here's just some general considerations for house-hacking-
Hope that helps!
If buying a duplex a lender will let you use some of the income to help qualify. You'd need to be approved for around $300k to get a duplex around here. I'd recommend speaking with another lender. If a lender really ran your credit they'd be able to tell you how much you qualify for; whether that is $100k or $300k. I work in the Sacramento area and know a few lenders if you need a referral to a good one.
Thank you all for the advice and responses I will keep this updated as I talk to a lender and real estate agent hopefully this week.
Depending on where you’re looking, $250-300K should be able to get you a decent multi family.
Use and FHA loan, put 3.5% down and if there's already tenants they'll count 70% of the rent as income.
I’d just shop around lenders. You should be ready to go.
I am a local lender and you can use 75% of new rents for half of a duplex to offset the cost of the mortgage in your DTI. You would need a rental survey and copy of a lease. The rental survey is prepared by an appraiser and requested by the lender at time of appraisal.
Big Valley Mortgage