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Old 03-28-2010, 07:11 PM
 
8 posts, read 33,139 times
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I am asking a question for a very dear friend of mine that I have known for about 5 years. She is an immigrant from Brazil and has had her legal residence or "green card" for at least a couple years now. She is self employed with her own day care business and probably makes about 25,000 a year and I know she has filed her taxes every year since I have known her. She has gone out of her way to make sure she has done everything legally. She wants to buy a house or condo, now that prices are so low and was wondering if she could qualify for a FHA loan. I helped her establish credit over 3 years ago, starting with a secured card and she has built herself up to 3 unsecured cards. She has paid everything on time and, at most, only owes a few hundred dollars on them. Her car was purchased on one of those "HIGH RISK, HIGH INTEREST" loans because she had no credit 3 years ago, but she only has about another year to pay that off and never missed a payment. The last time I checked her credit score was 738. The biggest concern I see is her low income. She is over 50 years old. I am not sure if age is a factor, but I typically think of a young couple buying thier house, when I think of FHA loans. She is definetly a first time home buyer. Does anyone know if she would have a chance to qualify and what she would do to pre qualify? I am assuming the best way to go would be to get a prequalification figure, then start house shopping. Does it matter if she plans to live in it as her primary residence? I have always assumed FHA loans were for couples looking for a primary residence. Any information would be appreciated.
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Old 03-28-2010, 07:19 PM
 
Location: Salem, OR
14,574 posts, read 35,068,972 times
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In theory she would qualify but with that low of an income you'd be looking at around a 75,000 house. She'd also have to have 3.5% ($2625) to put down on the house and on April 5th the fees go up for FHA. Currently closing costs would run about $6800 or so. So she would need close to $10k to close on an FHA loan...unless she could get the seller to pay her closing costs.

I don't know what you can get in her area for that. Out here, those are moldy fixers that are investor territory.
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Old 03-28-2010, 08:35 PM
 
8 posts, read 33,139 times
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I was thinking she could qualify for 62,500. 2.5 x her annual income of 25000. That was the formula back when I was in college and there were no crazy sub primes and an unrealistic boom that was doomed to hurt all of us. I like your figure. If she could qualify for 70k or more she should be able to pick up a nice South Florida condo that has been sitting empty for 2 years. I am just not sure if condos have the same qualifications as signel family homes. Coming up with he 10k could be a problem, but she has friends, including me that may loan out a couple of bucks for her. Thanks for he input
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Old 03-28-2010, 08:39 PM
Status: "Uncomfortably numb" (set 17 days ago)
 
Location: Coastal New Jersey
65,056 posts, read 61,249,098 times
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Quote:
Originally Posted by xkkk View Post
I was thinking she could qualify for 62,500. 2.5 x her annual income of 25000. That was the formula back when I was in college and there were no crazy sub primes and an unrealistic boom that was doomed to hurt all of us. I like your figure. If she could qualify for 70k or more she should be able to pick up a nice South Florida condo that has been sitting empty for 2 years. I am just not sure if condos have the same qualifications as signel family homes. Coming up with he 10k could be a problem, but she has friends, including me that may loan out a couple of bucks for her. Thanks for he input
Condos have to be approved by the FHA in order to be purchased with an FHA mortgage. You can find out which ones are approved here:

FHA Aproved condo listings and nationwide search | ForFHA.com

Good luck to your friend.
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Old 03-29-2010, 09:26 AM
 
Location: Salem, OR
14,574 posts, read 35,068,972 times
Reputation: 14126
Quote:
Originally Posted by xkkk View Post
I was thinking she could qualify for 62,500. 2.5 x her annual income of 25000. That was the formula back when I was in college and there were no crazy sub primes and an unrealistic boom that was doomed to hurt all of us. I like your figure. If she could qualify for 70k or more she should be able to pick up a nice South Florida condo that has been sitting empty for 2 years. I am just not sure if condos have the same qualifications as signel family homes. Coming up with he 10k could be a problem, but she has friends, including me that may loan out a couple of bucks for her. Thanks for he input

You can't loan her the money and have her qualify. You can gift her the money only. If condos are sitting that long, she'd have a shot at having most of her closing costs paid for by the seller. So then she'd have to come up with less.

Condos have different qualifications for FHA as the condo complex itself has to qualify.
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Old 03-29-2010, 10:35 AM
 
8 posts, read 33,139 times
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good input mightqueen and silver....I am bookmarking the FHA approved page for future reference. You have answered a couple questions I was not sure about and I have a place to start now
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Old 04-02-2010, 06:56 AM
 
157 posts, read 233,955 times
Reputation: 129
With that income, she should only really spend $650 a month on "housing". That indicates a payment of around $640 a month assuming 3% down, 4% closing costs, 5.5% rate, 30 yr fixed, 2% property tax rate, $250 a month HOA. I calculated the home she can safely afford under FHA is $57,500

With an income of $25k perhaps it is best that your friend continue to be a renter or find a cheaper home. Frankly speaking, a $70k condo is still going to have assessments sometimes as well as interior maintenace.

Now if she can find a 2 bedroom and perhaps rent the second room out, then things become a bit easier.

Last edited by night0wl; 04-02-2010 at 07:05 AM..
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Old 04-07-2010, 06:43 AM
 
5 posts, read 38,566 times
Reputation: 12
My apologies if I'm hijacking this thread, but it seems the OP's question has been answered and I hate to start a new thread. I have a question...

I am relocating as a new physician and have been pre-qualified to purchase my first home via the FHA route. I have great credit and I have the assets that I need to put money down and close. I also already have a contract on a home with a closing date of May 3. The problem is that my job doesn't begin until July 1 and I won't have a contract until mid-May. FHA guidelines allow one to close up to 60 days prior to beginning work with a "non-revocable contract" showing projected income, but like I said, the contract won't be available until after closing.

I'm curious if the underwriters would allow a co-signer to sign in lieu of this contract. Also, if this is an option, would I be able to drop the co-signer after beginning work with the contract in effect and payments being made on time.
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