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My bf is 19 years old currently (20 in sept.) He wants to try to get approved for a loan to own his first house. We live in Wisconsin. His income is around $40,000/year, and he has been working for the same company since he was 12. (Family business) He has around $10,000 for a down payment. All of his bills are paid on time (two credit cards, and car insurance.)
Unfortunately we've heard that a lot about getting approved for a loan has to do with AGE. So we're wondering if there is anything similar to the USDA-Rural Development loans, where
"That means a person is actually making the decision as opposed to a computer program. These loans will actually lend with $0 down, so having a down payment of 5% or more is a good compensating factor. If you can show better than average debt to income ratios, good banking history (no overdrafts), rental history (if applicable) and your 1+ year of credit history is good you should not have a problem."
His desires for a home loan are very level-headed as well... He is looking for around $100-120,000 so that he can buy a fixer upper.
If you have ANY advice, it's very much appreciated!!!! Thank you!!!
Legally age cannot enter into the approving or denying a loan. Just as a 95 year old can get a 30 year mortgage, so can anyone over the legal minimum age to sign a contract.
Really? That's odd that...His dad is an extremely smart man, but told us he was highly doubtful that we'd get a house because of my bf being so young... Hmph. It is good news, tho!
Any other suggestions on the best way to go about getting a loan for us by a person and not a computer generator?
Thank you!
Last edited by wants2own; 02-18-2010 at 04:45 PM..
I am sure that his dad is very smart, just has not learned all of the aspects of the mortgage business. It takes a while to learn everything
On getting a loan by a person, You will find that although part of the process is automated, this still is a people business. And that is for the smallest residential loans up to the largest commercial loans.
And thank goodness for this being a people business. wouldnt be much fun it is were all computers
As the previous poster said age should not be a factor for those over 18.
They do consider your last 2 years of income (as well as your current income level) which could be a factor for someone just starting out but not a dealbreaker. Similarly the more credit you have (which can take time to build) helps. For example when I bought a house I had never been late on a credit card/utility payment but I had never taken out a loan (like for a car or something) so my credit was lower than it would have been had I already done that in life. But I still got the loan--they look at the whole picture.
Pretty much anywhere you apply you will talk to people. People with fairly strict lending formulas in terms of debt to income ratios (so the amount you qualify for shouldn't vary too much by bank/broker). But you do get to discuss your situation with them.
It seems as long as he has a steady job, good credit and you have a good amount for a down payment you should be fine. You should check into first time home buyers loan. I dont know how it is now, but a few years ago you didnt need any money down. Im sure that has changed now. Has he considered a condominium as well? Also if you are filing for a loan together, not only does his credit need to be good but yours will come into play as well.
Good questions and points. He will need to document his earnings (more than once). Also, he may have credit but how much? That will likely lead to higher interest rates on the loan and PMI. FHA loan might be the right idea - you can put as little as 3.5% down, and on a 120k house, closing costs will be reasonable (8-9k)
I think he can qualify, But is it the right time? When you buy a house you want to have at least 10k beyond your downpayment/closing incase issues arise. It sounds like he should be saving more , IMO.
Good questions and points. He will need to document his earnings (more than once). Also, he may have credit but how much? That will likely lead to higher interest rates on the loan and PMI. FHA loan might be the right idea - you can put as little as 3.5% down, and on a 120k house, closing costs will be reasonable (8-9k)
I think he can qualify, But is it the right time? When you buy a house you want to have at least 10k beyond your downpayment/closing incase issues arise. It sounds like he should be saving more , IMO.
Well said. Don't be so laser focused on whether or not you can, pay attention to whether or not you should.
You 2 are just starting out and it's admirable that you're as far along as you are, Bravo. Just keep in mind that anything that can go wrong, will go wrong..particularly with your first home. We all have first purchase horror stories so just plan for the worst case scenario and you should be fine.
Well said. Don't be so laser focused on whether or not you can, pay attention to whether or not you should.
You 2 are just starting out and it's admirable that you're as far along as you are, Bravo. Just keep in mind that anything that can go wrong, will go wrong..particularly with your first home. We all have first purchase horror stories so just plan for the worst case scenario and you should be fine.
Good luck!
Thank you very much for your honesty.
As for the previous posters, NO it's not under the table! He has plenty of W2's to show, etc. Also, as for credit he doesn't have much but he has two credit cards -- $800 and $500 limits, always paid off on time. Beyond that he doesn't have a car loan, just insurance. So yes, I'm afraid he might not have enough credit. No, I will not be applying with him for the loan.
As for building more credit, I always thought that with the $10k he has saved up that maybe he should get his "dream car" he wants by putting some down on it and making payments, to establish more credit, but I guess that's not necessary... and apparently cars are a worse investment...
You're right as far as making sure it's the right time for us to buy a house... We're extremely reasonable and don't feel "entitled" to it by any means, just wondering if it's possible. I guess our mentality is that we would rather own than rent because it's worth it in the long run... It's kind of a waste to pay for rent, and have nothing to show for it. (??)
So pretty much he should just go to a bank, talk with them, and see what they can say? I'm thinking if he gets denied at one bank, maybe try another because they're not all the same???
Thank you again all so very much!
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