Need Advice Obtaining Mortgage

[Melody Stevens]

Help!!!

I am trying to get a mortgage.. $85k max.. originally for investment purposes but circumstances have changed due to a death in the family.

I've tried credit unions, local banks, big banks... no one will approve me without a $60k downpayment due to student loan amounts vs income (debt to income to high). My loans are in deferment until the government decides if they will be forgiven due to school closure. It's been 4 years now with no telling when a decision will be made.

What do I do? I dont want to rent. I want to buy so I can put equity into the house and use for investment later down the road. I have $5k for a down payment, please dont laugh to hard... need some advice.

[Albert Bui]

Originally posted by @Ramon Flores:

@Melody Stevens You are correct that a lot of banks will not loan due to your high DTI. Here are some suggestions:

- House hack, rent a large house and rent the rooms out to other people. If you are by a college, you can rent two people to a room. With the extra cashflow, save or pay down your debt.

- Have a partner go in on the property with you. Perhaps a family member? A spouse? Use their credit and their income, then perhaps someday refinance and change the name on the title to your name. 

Good strategy for real life (RL) however lenders, atleast with respect to conventional agency (fannie/freddie/ginnae mae) will not be able to use rental income from non legal units on a 1 unit property in 99% of cases (some limited ones for extenuating circumstances or caretaker who lives with you to take care of you).

In real life you're getting income and yes this is awesome and it helps to cover the payment but from a qualification stand point we'll only be able to use 75% of gross rents if there are legal units. An example would be, a fourplex, borrower lives in one unit, rents other 3 out at 1500. In this example, using a 4plex house hack can generate $1500 X 3 units = 4500 gross income X 75% = 3375 more qualifying income. This income represents roughly 230,000 of purchasing power. 

So how this plays in a real life qualifying example is as follows....

If the Fourplex is 800,000 for example sake, the borrower would only need to bring in sufficient income to qualify for the remainder of the 570,000 from their own sources (job, self employ, other rental cashflow, airbnb, 2nd job, interest note income, K1's from other businesses, etc)