Post # 1
My husband and I have found our dream house. It’s $239,000. And after doing some research for first time home buyers in my area, there’s no way we can buy this house right now, or maybe any house for that matter because my husband and I are self employed and brings in about $6,000 a month. I know banks want to see job history and steady income (we get paid every week, so it is steady but we have only been doing this since March). I was in school and not working and he had a few business ventures that were a fail. So our job history is not steady.
Also, my husband has no credit and several thousands dollars in student loans. I don’t have any student loans but my credit is just average (in the 680s) and does not help me since I haven’t been in the system that long to have enough credit history.
So I know we should wait and save up more to put down a huge down-payment. I don’t know how much longer dream house will be on the market but if it’s not meant to be than I can accept that.
But what about if we find another house that is within our reach and budget in the near future? Will putting down a large down-payment make it easier for banks to approve us for a loan?
Will it still be difficult to buy a house then?
Has anyone purchased a house through owner-financing? If so, what is needed and what was your experience like?
Post # 3
If you are self employed you need to show two years worth of income (tax returns) before you can get approved. Your debt to income ratio should fall between 41-43% ideally. To get a good rate your credit score should also be a little higher. I would suggest saving for a down payment for two years and then you sould be fine, work on your husband’s credit as well, and make sure your your debt to availability doesn’t exceed 30%.
a large down payment will help with PMI but not so much to get you approved..it used to be that with a large down payment anyone could get approved, but the guidelines are very strict now.
Post # 4
I’m curious about this too. I hear it is harder when self employed, so I am interested in hearing stories
Post # 5
When my ex and I bought our house in 2004, we had to jump through a lot of hoops THEN (and that was before the economy tanked). He was self-employed, but I was not. I had “regular” employment that could be tracked, etc. I know we had to have a ton of paperwork out the wazoo, but we were able to do it. Good luck!
Post # 6
Missloveknot is right. Darling Husband is self employed and anything we do for financing we do need to show 2 yrs of business tax returns. Unfortunately just a few months of being self-employed will not allow you to get a mortgage. Even if you weren’t self employed you must show job history.
Now when you say 6k of income per month is that after all of your business deductions? Most banks will go by your gross income after deductions, aka, the amount you pay tax on.
Post # 7
@Missloveknot: You had exactly all the figures I was about to pay.
OP, if your mortgage payment + recurring monthly debt (student loans, car payments, insurance, utilities, credit cards, and any other liabilities) exceed 43% of your income, you are going to have a very hard time securing a loan. In addition, your credit score is working against you because (at least in my area), they’re looking for scores 740+.
If your husband has student loans that are in repayment, he has credit. Those count towards credit scores! He should definitely have his score run by a mortgage broker/lender when you’re serious at buying.
As always, you should talk face-to-face with a professional about your specific situation. They will crunch the numbers and tell you what you can qualify for.