Home Purchase Financing Challenge

[Chris Hoffman]

I have a tricky situation.  I know this site is more geared towards flipping, rehabbing, investment, rental income, etc., but I am hoping someone here might be able to help me.  Hopefully I can remember to cover everything so you have the full picture.

I need to move from where I am renting now by June (the owner wishes to move into the home).  This has happened to me twice now in the past 5 years.  I am more than over renting because it costs a fortune to get everything packed up and moved.  I am legally blind, and my mother who will also live in the home, has poor health (she has a ton of stuff, and with her getting up there in age, I don't want to take the things that make her happy away from her).  So, we're not very much help with getting everything packed up and moved...have to pay a company.

In 2016, the home we lived in from the 16 years prior was foreclosed.  It happened, not because I couldn't pay the monthly payments, but because of a balloon payment I was not aware of, and the mortgage company's unwillingness to help with the situation.  Had I known then some things I know now, had resources then that are available now, etc., it would not have happened.  But, as a result of it, I have learned and grown a lot.  Anyway, while we had to leave the home in 2016 and start renting, the home didn't actually sell until 2018 (we were already moving from the first rental by then!)  So, I know that's when the foreclosure seasoning period actually begins, sadly.

I am also self employed. Until last year, I have always deducted most of my income. But, knowing that I needed to buy a home, I did not deduct anything whatsoever for 2020. But, with the foreclosure, the only traditional mortgage option I have available is FHA (they require 3 years seasoning). But, my problem with FHA is two fold - 1) in most counties, the max mortgage amount is around $356,000 and 2) FHA requires 2 years of tax returns. So, my available revenue is cut in half (I did not know this part when I started). Since we have a number of requirements in the home that make it harder to find and more pricey, this is causing a problem. We found one recently that would have been perfect, but it was $425,000. I knew it was a slim chance the seller would be willing to come down that much anyway, but I didn't even have the chance. By the time I contacted him and got a reply, someone else had already bought it.

I realize that I am trying to buy in one of the worst times.  Because prices are up and availability is way down.

So here is my question...  What would be the most advisable funding solution for this situation?  I have enough to pay about 5% down (and afford packing/moving costs).  Even if I have to pay higher per month for a couple years, that would be okay...so long as I could refinance when I am able.  But, I can't afford to pay more than the 5% down. 

Thanks much in advance.  I really appreciate any input you can offer.  Hopefully, there will be a solution here.  :)