Buying a Home (workarounds??)

**disneysteve** · 07-09-2013, 08:50 AM

Originally posted by vapid2323 View Post

we make just about 130k a year

If you make 130K, you shouldn't need government assistance to buy a home.

I'd forget about looking for ways to get "creative" and just do it the old fashioned way. Save up your emergency fund and your 20% down payment and when you're ready to buy, go for it.

**bjl584** · 07-09-2013, 08:57 AM

I agree with the other posters.

Save up a down payment of 20%, save up a 6 month emergency fund, pay down your other debts, then go shopping for a home. Rent until you have met the previous criteria.

Buying a home because of market conditions is a horrible idea. Buy only when you are personally prepared and able to do so. Not before. The state of the economy or interest rates are irrelevant.

**vapid2323** · 07-09-2013, 09:29 AM

Ok guys, I get it but lets clear up some assumptions

I live in downtown Bellevue, WA (very close to Seattle), I never said I don't have a down payment I was interested in the benefits of all the programs that my state offers.

As for saving, I agree thats the best way to go, I am looking for other things on top of that to put myself in the best position. My first home looks like it will be in the 500k range just due to the area I live in and range to work etc.

bjl584, I think you might be right, I am stressing due to the market flipping

**disneysteve** · 07-09-2013, 09:40 AM

Originally posted by vapid2323 View Post

My first home looks like it will be in the 500k range

I think this is a mistake that you'd regret.

On a 130K income, you should be spending in the range of 325K to 390K.
500K is way beyond what you can/should comfortably afford.

Now if, during the time that you are saving up your down payment, your income rises closer to the 170K mark, then that 500K house wouldn't be so unreasonable.

**riverwed070707** · 07-09-2013, 10:54 AM

Originally posted by vapid2323 View Post

Ok guys, I get it but lets clear up some assumptions

I live in downtown Bellevue, WA (very close to Seattle), I never said I don't have a down payment I was interested in the benefits of all the programs that my state offers.

As for saving, I agree thats the best way to go, I am looking for other things on top of that to put myself in the best position. My first home looks like it will be in the 500k range just due to the area I live in and range to work etc.

bjl584, I think you might be right, I am stressing due to the market flipping

To be fair, when you put "workarounds" in the title of your post it implies you're looking for ways to qualify when you otherwise wouldn't. That makes it seem like a bad idea from the get go. You can apply for a mortgage using just one spouses income but there are reprocussions.For example, you want to use one income to qualify for a an income-restricted program, well if you do that, you'll also have to only use that income to qualify for the mortgage. Unless you have several hundred thousand dollars for a DP, you aren't going to qualify for a $500k mortgage on a $70k income. If you do have a large enough DP to qualify, then you don't need the program.

**JoeP** · 07-09-2013, 11:38 AM

Originally posted by disneysteve View Post

I think this is a mistake that you'd regret.

On a 130K income, you should be spending in the range of 325K to 390K.
500K is way beyond what you can/should comfortably afford.

Now if, during the time that you are saving up your down payment, your income rises closer to the 170K mark, then that 500K house wouldn't be so unreasonable.

I agree. Just because a lender gives you an upper limit, doesn't mean you should go that high.

It used to be your first home was a Starter Home about 2x-3x salary, at least in my area. And if homes near work were not available for that price, you'd continue renting or move out to the more rural areas. I just can't get my head around a half million dollar first home, regardless of income, especially since most people sell in the first 7 years.

**siggy_freud** · 07-09-2013, 08:19 PM

I'm going to diverge from the crowd and say 20% isn't necessary, and depending on the interest rate you can get may be better spent elsewhere. Historically homes and property in general have been solid investments. Today, their value is increasing at a rapid rate, and interest rates are beginning to rise again. Now is the time to get back in, even if that means getting a mortgage without 20% down.

Look at lenders <20% down options. Wells Fargo has some options with 5% down, and PMI that you can get out of at anytime provided the property has a 78% LTV.

I bought my first property with 3.5% down, and refinanced it a year later dropping a % point and dropping FHA mortgage insurance because I had increased the value through some targeted renovations. That said, stay away from FHA now if at all possible, because the mortgage insurance is for the life of the loan. The only way out is through refinancing, and with rates going up I wouldn't bank on a lower interest rate a year from now.

I will recommend against a 500k home loan on a combined 130k a year. That would be difficult to sustain if one half lost their job, or other unexpected expenses came up. My significant other and I have around a 150k combined income and aimed to stick to 250k or under. We ended up building for 252k.

**cardtrick** · 07-09-2013, 08:43 PM

To answer your question, there aren't any workarounds. You can't use 1 income to get into state programs and both to qualify for a bigger home.

**Jerry91** · 07-09-2013, 09:10 PM

If you meet all the required criteria of the home loan programs alone, then you will be able to qualify for it all alone. If there are certain criteria which you do not meet, then you may have to take help of your spouse or a co-signer.

**feh** · 07-10-2013, 08:08 AM

OP - I don't know if you're interested in advice other than what you've asked for, but I suggest you list your budget and ages. On the surface, it seems like you're rushing into an ill-advised purchase.

**Gailete** · 07-10-2013, 02:41 PM

I have trouble conceiving of a $500K 'starter home' especially on your income. You implied that you had a down payment but didn't say how much. Having a 20% down payment frees you from paying the PMI for years on end. Also moving into a new home always costs money and the maintaining a home can run about 10% of the price a year. For example if you buy a $500K home you are going to be expected to be doing good quality landscaping, etc. yearly. If you let your house go to weeds the neighbors will be very unhappy as you are letting your house go to pot and decreasing everyone's property values. You may not need $50K a year, but you are going to need in the thousands to keep your expensive house's value up. Lots of expenses with moving including new furniture or more furniture to fill up the house, paint and wallpaper, then towels, potholders, sheets, pillowcases, comforters, etc. to coordinate. No is you are moving into a $60K like I did 12 years ago, no one has any expectations of what the outside or inside will look like, but the bigger the house, the more impressed people expect to be. Anyhow just some things to think about.

I wouldn't rush either to try to get into a house just because of the interest rates. You make big mistakes doing things too fast. And trying to get work arounds to save money is something I would think you would want to be cautious of as if you are caught hiding income to get a benefit, you could end up in big trouble. I don't know of any programs that are available except for a Section 8 one that allowed a woman to buy my $60K house when hubby and I got married. She got financial help to repair the roof and other things that supposedly made the house uninhabitable (although I had no trouble there!). For years I couldn't even drive past the house since I knew she was getting Welfare help to buy it and you could see her better car in the driveway, the landscaping that she could afford that I couldn't, the shed she could afford also that I couldn't. I did start to wonder how someone on Welfare had funds for things like that. But I guess that is our tax dollars at work. Oh well. I feel much better about knowing we are paying for our home with our own money and don't have to depend on other's taxes to get it. I'm sure if you go about getting your house on your own power you will feel better about it as well.

**bennkar** · 07-14-2013, 10:30 AM

Not sure how ambitious the OP is, but he could look into the 203k rehab loan programs. I am not sure if there is any income limitations for this program (doing a quick search I didn't find any). Of course the whole process is a pain, and that's not on top of the need to find a house that hasn't been rehabbed already. Its what I did for where I live, and it worked out great. And it was a 97% loan, but it didn't kill me. Of course, YMMV.

**ESMonitor** · 07-15-2013, 05:33 PM

Any debts? Sometimes a $130K income comes with burdensome student loans.

**~bs** · 07-15-2013, 07:31 PM

Originally posted by vapid2323 View Post

Hey guys,

I did search google a bit to try and find an answer to this question but with no luck, sorry if this is a common one

Just got married, looking at homes. Most tax credit, grants and no down payment programs require you to make under a certain amount of money to qualify.

Well together we make over the max amount for every program I have found, but buy myself or herself we would be under the max for all those programs.

My question is simple (I hope), can I, file for a homeloan with just my credit alone to take advantage of these programs such as the MCC?

With that said, we make just about 130k a year, we are first time home buyers, do you see a better solutions that can happen in the next few months? We want to try and get into a home before the market shifts much more.

Thanks so much!
Ross

If you're not married, are a first time homebuyer, purchase under your name alone, and make under the single person limit (I think it's 70-80k), then yes you can qualify for these programs. If you're married, I dont think so. If you were thinking of gaming the system, you'd make the purchase before you got married. Don't quote me on this, but I dont think the title can change once you're in the program. So you cannot buy under your name, get married, then add her name to the title. If you sell, transfer, or otherwise modify who's on the title, the credit stops, and you may be subject to recapture tax. Again, don't quote me on that.

For what it's worth, I bought my home under a MCC program so I'm somewhat familiar with it.

Buying a Home (workarounds??)