What is my best loan option?

[Lynn Hammers]

I'm hoping for some solid advice on this subject.

There's a home nearby that I have been trying to purchase since Thanksgiving. I had a lender lined up who had no clue what they were doing and got me into a pickle.

First a little background. My wife and I have 3 kids, and are living in a 2 bedroom mobile home on a family-owned piece of property. I do NOT own the property nor the trailer. However I DO own my mothers house in another county. It is a single-family from the 70's on small acreage with no liens or anything against it. Valued at approximately $150k.

My wife is a stay at home mother, so we're doing the loan strictly in my name. I gross $2860 a month, and we receive $361.40 a month in public assistance for our children. We have little reserves for a down payment, but have no other major debts and could easily afford the payment.

As I sit now, I have a purchase contract on this new property with a Feb. 16th closing date, so time is of the essence. The purchase price is $206k, sellers agree to pay 3% closing costs. From my calculations, this would put me at approximately a 36% front end DTI.

Ideally we would like to get a 0% down loan such as a USDA backed one, but I fear my DTI will limit that. FHA perhaps? Or a conventional 97% loan?

In the event of needing a small down payment, what are my options with my mother's house? Would I be able to take out a HELOC or something similar to use for my down payment?

Thank you in advance.