Can we qualify for a mortgage, with no money down?

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My sister and I live in NJ, and rent is outrageous. We are paying approx 1900 in rent between both of our apartments. We would be 1st time buyers.

My credit score is poor around a 560. I earn 27,000 a year, and receive child support of 5,200 a year. My debt ratio is high 80%, mostly due to a student loan. My cc’s will be paid off within a month, bring it down to about 65%. I have had a bankrupcy discharged since 2001.

My sister has a great score, around 740. She makes approx 34,000 a year. I would say her debt ratio is at 70%.

Neither of us have any car loans. No late payments in the the 3 years.

We would prefer to buy a multi family house, so it would help mortgage/tax wise. A few that we are intrested in are priced approx 350,000. We would like to share a unit, and rent the other. According to similar rentals in the area, the rental unit would rent for approx 1400-1500 a month plus utilities.

Is what we are considering realistic? Or asking too much?
We do have money saved in the bank, only about 15k between the both of us. This is not to be touched – emergency cash only. We are not willing to put in on a downpayment or we will have nothing to fall back on.

We are spending a big portion on rent, and we would rather invest it in a home. Rent is like throwing money in the trash.

What would be an ideal loan amount that would be approved?

  1. Reply
    May 17, 2011 at 9:29 am

    Two years ago you would have qualified for a sub-prime loan. Today, I doubt you would qualify at all, your sister may qualify but probably not for zero down as few if any lenders are still accepting zero down. Zero down and other lunacies were a symtom of the housing bubble excess which has since been cured.

  2. Reply
    greg g
    May 17, 2011 at 10:07 am

    no,u r not realistic. landers are not willing to talk risk any more. they are asking 20%down ,all doc.and good credit score.(more than 700)

  3. Reply
    May 17, 2011 at 11:00 am

    Slitlkr is correct.

    The other thing you may want to think about: If you have no down payment, that means that you have no savings and you do have that student loan you mentioned.

    This means that anyone DID write you a loan, it might be a mistake for you, because you have left yourself no margin of error. For example, suppose the rental market goes bad in your area and you have vacancies in your multifamily for a while — with no margin of error, you will have trouble covering the carrying costs… I’m sure you don’t want a foreclosure to add to the bankruptcy already on your record.

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