is it possible to still purchase a house without a downpayment (in TX)? (Little Elm: mortgage broker)

[semidevil]

I'm still very far away from purchasing, but maybe in 3 to 4 years, we want to purchase.

Back in 2006, with my first home (not in TX), I was able to purchase a house with 0 down very easily. In fact, the monthly mortgage was almost 40% of my monthly salary but I was still able to get a loan. While it was a bit risky, it turned out fine and I was able to manage it.

What about now? Having gone through the credit crisis, is it still 'hard' to apply for a home loan? More specifically, what are the chances of getting a home loan approved with 0% down? This time, if I do buy a home, I'll probably just stick with the 30% rule (30% of monthly salary) and take less risk, but I"m wondering the chances of being approved if I don't want to put any money out.

I know the benefits of putting a downpayment, but I'm just curious. I also don't know if I can save at least $30,000 in 3 to 4 years (based on a basic $150,000 home, but I know we want something nicer once our salary is higher.). That also means that if I save $500/month, I will need to take at least 5 years to look at a downpayment.

In terms of credit score, I'm at about an 824, so I'm not worried at all about that part...

[CMC_TX]

Originally Posted by semidevil

I'm still very far away from purchasing, but maybe in 3 to 4 years, we want to purchase.

Back in 2006, with my first home (not in TX), I was able to purchase a house with 0 down very easily. In fact, the monthly mortgage was almost 40% of my monthly salary but I was still able to get a loan. While it was a bit risky, it turned out fine and I was able to manage it.

What about now? Having gone through the credit crisis, is it still 'hard' to apply for a home loan? More specifically, what are the chances of getting a home loan approved with 0% down? This time, if I do buy a home, I'll probably just stick with the 30% rule (30% of monthly salary) and take less risk, but I"m wondering the chances of being approved if I don't want to put any money out.

I know the benefits of putting a downpayment, but I'm just curious. I also don't know if I can save at least $30,000 in 3 to 4 years (based on a basic $150,000 home, but I know we want something nicer once our salary is higher.). That also means that if I save $500/month, I will need to take at least 5 years to look at a downpayment.

In terms of credit score, I'm at about an 824, so I'm not worried at all about that part...

I don't know about all loan programs, but you can 100% still do conventional in TX with a minimum of 5% down. You can do FHA with 3.5% down on qualifying properties.

For conventional, the max is really going to be 5% down & no more than 45% DTI.

[semidevil]

good point. I remember that with FHA, you need to be a first time home buyer correct? Since I'm not a first time home buyer, but my spouse will be, will we still qualify for FHA and still count both of our salaries in the qualification?

And conventional doesn't care whether you are a first time or not right? assuming they just consider your credit score, salary, and DTI.


In that case, that does make it easier and more hopeful if we want to buy in a few years.

[aggie972]

I've heard that FHA is to be avoided these days unless you just can't qualify for a conventional. Apparently the FHA changed it's rules, and won't cancel PMI when you hit 20% equity anymore like conventional is required to by law.

[Residential Pro]

You can purchase homes in what they consider rural areas like Savannah, Providence Are on 380 Up north in Little Elm for 0 Down

[CMC_TX]

Originally Posted by semidevil

good point. I remember that with FHA, you need to be a first time home buyer correct? Since I'm not a first time home buyer, but my spouse will be, will we still qualify for FHA and still count both of our salaries in the qualification?

And conventional doesn't care whether you are a first time or not right? assuming they just consider your credit score, salary, and DTI.


In that case, that does make it easier and more hopeful if we want to buy in a few years.

Conventional doesn't care at all whether you are 1st time or not. Like you said, they will look at your income, credit scores & DTI.

If your credit is really in the 800s, you will definitely qualify for one of the best rates & you can for sure do 5% down, as long as the DTI doesn't exceed 45%.

Just make sure if you want to count commission income that you're in your job for at least 2 years, or that you're able to prove a job change is in the same field you previously worked in. There are some caveats with commission.

If you can save up 5%, I think you'll be fine. I would recommend going through a mortgage broker that will shop different lenders instead of a traditional bank.

Don't let anyone tell you you need to have higher than 5% w/conventional. It's not true unless you have terrible credit, high DTI etc.

NOTE: you will have to pay PMI until you have 20% equity, but that's the only negative.

Also, if you have great credit & are really just wanting to get in a house, you can often get a "lender credit" of thousands of dollars toward your closing costs in exchange for a slightly higher interest rate. Obviously not great, but if you don't have a lot of cash on hand, this can help get you into the house. You can always refinance later.

As far as FHA, Aggie972 is right, the PMI has made it much less favorable, but again, if you need 3.5% down, it might be the only way to get into a house. Again, you can always refinance. Max for FHA loans in TX is $287,500, but note that many sellers will not take FHA offers seriously due to our hyper-competitive market.

If I were you, I'd focus on just the 5% and doing conventional if you can. That should be manageable.