Young couple with pretty good income, but low down payment, can I buy a home?

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I’ve gotten through advanced calc and computational analysis courses, but navigating the world of finance and mortgages is still a bit daunting.. any help would be appreciated:

I make $ 75-80k and my spouse makes about 40. We’ve been renting in the MD-DC-VA suburbs for 4+ years, with perfect rental history (paying about 1300/mo), and have average credit.

We’d be first-time buyers. I know we could easily swing the monthly payments, it’s just the initial costs I’m not sure about.

Anyway, given this income (total about 110k/year before taxes), and a small (say 3-5k) down payment. What options, if any, are there for buying a 250k-300k (town)home? (we’re 25 years old if that matters)
I’m aware of FHA loans, but how/if they would help lower the inital costs is still a mystery.

fyi you did sound caustic, and the plan is to wait at least 4 months. I’m looking for some info and others’ experience.

  1. Reply
    ♥I am a MESS♥
    May 21, 2011 at 2:53 am

    Down payments vary from state to state, in Ohio it’s 3.5% of the cost of the home.

  2. Reply
    Sexy Chica
    May 21, 2011 at 3:13 am

    FHA loans all require the homebuyer to pay mortgage insurance premiums.The amount would depend on your purchase price. So keep that in mind.
    If your credit is good, then you should still be able to buy a home with 100% financing. My friends just closed on a home last month with no down payment. The 3-5 K you have will likely all go towards closing costs. That is about how much closing costs are.
    The FHA website has lots of info on their different kinds of loans. If you dont have 10% to put down on your home, then you will likely have to pay mortgage insurance anyway. It can cost anywhere from 100-300 extra a month on top of your mortgage payment. Hope i was helpful.

  3. Reply
    May 21, 2011 at 3:53 am

    Ask a mortgage broker about down payment assistance programs. I was told about one called AmeriDream and what they do is they take a fee of $ 500 and act as a nonprofit grant provider between the seller and you. On a FHA loan, there is a 3% down payment requirement that the seller would contribute to AmeriDream, then it would be “gifted” to you for you down payment.

    Most of the sellers will also pay 3% concession towards down payment and closing costs. You may need to offer at or above their asking price to get them to agree.

  4. Reply
    May 21, 2011 at 4:06 am

    Sorry if this sounds caustic, but, if you think a $ 2000+ mortgage payment each month would be such a piece of cake, why do you only have $ 3k saved up?

    Why not get an initial pre-approval now, do more research, get your ducks in a row, and for four months, put aside the money you’d be spending on a mortgage payment. Don’t forget taxes, insurance, maintenance, upkeep, utilities. And after just a few months, you’d have at least $ 11,000 or more for a downpayment. Plus, the real estate market is sorta in hibernation during the winter. Many people wait to put their houses on the market until spring/early summer. By then you will have more choices, as well as more money.

  5. Reply
    Kevin J
    May 21, 2011 at 4:14 am

    I am a loan officer in the Northern VA area. I can tell you that unless you are in some sort of the military, you will need to put down payment into purchasing a home. If you are military, you could do a VA loan and get 100% financing. If you aren’t military, FHA will be the way to go. There is no down payment assistance any longer from any kind of non-profit groups such as Ameridream (that went away on October 1, 2008). As of January 1, 2009, you are required to put 3.50% into the purchase with FHA. If you have a 401K, you are allowed to borrow against it for the purchase of a home. If that is not an option, you can get the money gifted to you by a family member. The other good news for you is that if you purchase your home prior to July 1, 2009, you can get the first time homeowner tax credit of $ 7,500, so if you do need to reimburse your 401K, you can do it with this money. It sounds like you will qualify with no problem with your credit and with your income, but make sure you have the down payment in order, if not, you will need to save up for the 3.50% of the purchase price. The closing cost can be taken care of by the seller.

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