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FHA Questions

by Charley King
(New york)

I have never owned a home but want to. I live with my girlfriend who owns a home. We want to sell and buy using me as a first time home owner but having her also on the mortgage. Can it be done?

=============ANSWER=============

Hello Charlie;

It's a great time to be buying a house.

The fact that your girlfriend owns a home and you want to put her on your new mortgage, this can work, however you need to consider a few things.

If you do not sell her house first, this will count against you when the lender figures the DTI or Debt To Income. This ratio cannot be more than 28% on an FHA mortgage. So in other words, 28% of yours and your girl friends monthly gross income will be considered when qualifying you for a new mortgage. This 28% would be your maximum house payment including taxes and insurance.

So if you do not sell your girlfriend's home, then you can rent it hopefully for more than the payments are and this will help relieve the hardship.

The lender will take the lower of your credit scores. So if she has a lower score than you, it will only work if her score is above 580.

To make it worse, you will not be able to qualify for the first time home buyer tax credit if that is what you're thinking. One of the tax credit's requirements is you cannot be a home owner for the past 3 years. So then, since you're just now selling her house, that may knock out the tax credit idea.

This is not likely what you want to hear, but it's the cold hard truth.

Do not give up though, get her house sold, save money for a down payment and still buy a new home with an FHA mortgage. It really is the best mortgage product for first time home buyers and has been for decades.

Hope this helps,

Jeff


Comments for FHA Questions

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FHA Questions
by: June

My fiance and I were considering the same thing. Thanks so much for the question and the answer. We now know what we should do next.


Thanks for the great info!
by: Kasey

This was great information, I had the same question, the roles were just reversed. Thank you!

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Financing My Home

by Lafay
(Dallas, TX)

I have made an offer on a house and the seller (CitiMortage) requested that I prequalify with a specific mortgage company. I did and I applied for an FHA 203b and the seller countered by requesting that I obtain a conventional prequal with the same mortgage company. What possible reason(s)will a seller dictate the type of loan that a buyer has to get to buy their property?

=====ANSWER=====

Hello Lafay,

Thanks for coming by my site and asking a question. I hope you find my answer helpful and pay it forward by telling others about my site and visiting my sponsors.

As I think about your question, and if I understand this correctly, your seller is a bank and you are attempting to purchase a foreclosure property. If Citibank owns this property and they have designated a certain lender, is it one their own companies?

I really cannot see why they would care where the money comes from as long as you qualify for the loan. That seems strange to me.

Now the fact that they ask you to get a conventional loan rather than an FHA 203b, the only reason I can see they do not want you using an FHA home loan is this: The house may not meet FHA guidelines for a mortgage.

So you may need to have the house inspected and find out what may be wrong with it. The seller may know something you do not.

Ask for a sellers disclosure statement if they have not already provided one.

I would be careful here, be sure you know what you are buying. An FHA mortgage is better for the lender since it insurances them against default. But some sellers do not like the FHA mortgage because it requires the house be in good shape and qualify for the program.

I hope this helps.

Best Regards,

Jeff Ragan

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