Anything you know about FHA loan please!?
Hey, hope anyone with experience or some knowledge can enlighten me. So sadly my mom is being kicked out of the place she's been living for the past decade. Thing is she is now thinking of getting a FHA loan but doesn't seem to get any response with the 2 banks she contacted. She made $27k last year and makes like $2.4k a month now so how much of a house can she afford in nyc? What can she do? She has some money for a down payment ($10k-$12k) and could *probably* try to get more. She wants to rent some of the house she might buy, she currently knows someone that would be willing to pay $700 a month to rent a room for sure and might be able to get another person that could pay the same. Please, if anyone can help in any way sharing maybe what could be done or what path to follow, trust me, you would be helping a lot and that's all I ask. Maybe you can provide me with a site to ask these questions as I only found one with not many active people. She lives in nyc so most houses are expensive but she would hate going out the city because she cant drive. Thanks in advance
- EvaLv 71 month ago
She wouldn't qualify for a mortgage that would buy much in NYC. Her mortgage payment can't be more than about $800 and then there's the property taxes and insurance. The bank won't loan on income she "might" get.
- realtor.sailorLv 71 month ago
A quick search on Realtor.com shows there is nothing that your mother can afford. Keep renting.
- SimplytheFACTSLv 71 month ago
typically, you can get a mortgage up to 3x your yearly income, sometimes they will extend it to 3.5X.
for example, in NJ taxes on a small house in a modest neighborhood tend to be about $10K per year, but in another state might only be $1000. A bank in the lower cost area may be willing to extend the mortgage to 3.5x yearly income.
based on 27K income, she can get an 81K to possibly 95K mortgage if she has no other debt,
with 28,800 income per year that goes to 86,400 to 100,800
realize if she were to buy a condo, the condo fee would lower the amount she could mortgage...even though that doesn't make sense...i live in a condo, half of the fee goes to heat/water/sewer, repairs I would pay anyway (and are less since the expenses are shared with other condos--ie roof, hot water heater, etc).....same expenses you would also have in a house....much of the rest goes to lawn/snow...which some single family home owners would also pay.
minimum down payment is 3.5%...PLUS closing costs...for an FHA loan.
any potential room rental income from a potential tenant would not count....700 for a room makes me think this is a more expensive area....that is about the going rate for a room in a $300k house in my town.
i doubt there is anything she can afford that would be commuting distance to her job in nyc.....maybe in a very bad neighborhood...and commuting can get very expensive.
you don't prepay 1 year property tax, you pay 1/12 each month with the mortgage payment. There may be an upfront cost for closing to reimburse the seller for any taxes prepaid, but that usually is no more than 3 months.
if she considers a condo, most do not take fha loans.....and with less than 20% down ,there will be mortgage insurance..if i had to guess about 80/month
- curtisports2Lv 71 month ago
Unfortunately, she cannot afford to buy anything in or around New York City.
She has enough cash to cover the minimum 3.5% down payment on an FHA mortgage, plus the closing costs and upfront one year of property tax and homeowner's insurance (monthly amounts for paying the future bills on those two things will be included in the monthly mortgage payment and the lender will pay those bills as they come in).
A $2,400 monthly income that she can document by the last 2 years worth of W2s or tax returns will qualify her for a monthly mortgage payment of approximately 28% of that (some lenders may go a little higher). That is about $680 a month. I live in upstate NY where property is much more affordable than anywhere near NYC, and my property tax alone is $500 a month. If she could find a house where the yearly taxes are only $200 a month (insurance might be $30 a month), that would still only leave her $450 a month to go towards the loan principal and interest. At current interest rates on a 30-year FHA (these rates are somewhat higher than conventional mortgage rates), she would qualify for about a $95,000 mortgage, meaning for her to go above $100,000 on a house, she needs more cash than she currently has.
She won't find anything for $100,000 in or around NYC.
FHA will count SOME of the estimated rental income if you are buying a 2-4 unit house and you will be living in one unit. They will NOT count any estimated money from renting out rooms in a single family house. Once she has proven experience in being an owner-landlord, with at least 2 years of tax returns showing a profit on the rental business, then they might count the income toward qualifying, but that doesn't help her now.
She needs to increase her income, save more money, and look elsewhere, where houses are in her affordable price range.