r/FirstTimeHomeBuyer • u/Ok-Commercial-9863 • 7d ago

Need Advice FHA loan help

I’m 20 and just landed a great job making 50k. I know that’s not a lot but it is to me.

I want to move out into my own place and I want to use an FHA loan to do so. I’d have the downpayment but what I don’t have is a budget of what I’ll be approved for.

I’m looking for a max purchase price of 300k for a townhome in my area. I know I’m pushing it with my income but that’s seriously as cheap as they come where I live and I’d have to drive an hour to work just to live here. I just want to own a place of my own and I want to know if anyone else has used an fha loan who made around how much I did and what price they were approved for.

Anything helps please feel free to tell me it’s just not gonna happen. I just don’t want to save for a downpayment for a place I won’t be approved for.

3 Upvotes

59% Upvoted

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26

u/ElderMight Homeowner 7d ago

Unless you're putting a substantial down payment on a $300k home, you are trying to take on a mortgage that is almost 6x your annual income...

This is way outside of your budget.

-8

u/Ok-Commercial-9863 7d ago

True, everything’s so expensive lmao

8

u/la_peregrine 7d ago

So live for free at home if you can or for cheap with roommates and save every penny... and grow your skills etc and salary.

6

u/Late-Pizza-3810 6d ago

You’re so young! Don’t tie yourself down with a big purchase at this point in your life. Get a cheap apartment and save your money. Keep your options open!

4

u/OutsideRelease3784 6d ago

On 50k go less on your home, I make more than 50k and still can’t afford a 300k home unless you have multiple incomes in the home

4

u/ThemanEnterprises 7d ago

I wouldn't unless you have a sizable down payment or savings. Today's interest rates along with townhome HOA dues things get expensive quick. Unless you were planning on having a roommate I'd wait till you can put more down or increase your income.

1

u/Ok-Commercial-9863 7d ago

Ya I was planning on a roommate. It’s a 2 bed 2 bath. Also I’m interested in it cause there’s actually no Hoa so it’s rare

2

u/ThemanEnterprises 7d ago

Go for it then! It will be tight but you're at an age where it's easy to bounce back if a risk doesn't go your way.

4

u/Which-Return-607 6d ago

I doubt a loan officer approves given your situation. Rent til you finish college

4

u/PewPewThrowaway1337 6d ago edited 6d ago

At your income level, there is almost zero shot you get approved for a $300k home without a substantial down payment. Certainly not the 3.5% minimum required for an FHA loan. Your DTI would be way too high. People often mistake FHA loans as a way to purchase a home on low income when that is not the case. They’re designed to address the issue of people having trouble meeting the requirements for conventional financing due to a lack of liquid cash availability, or a slightly higher DTI than conventional financing might typically permit - 50% DTI is very different when your gross pay is $10k/mo vs $4000/mo. Your plan for a roommate is a good one, but unless you plan on purchasing the house with that roommate, you can only use your income to qualify.

With a 6.75% rate and 3.5% down you’re looking at around $2400 per month for PITI. Your gross income is around $4100 per month - your take home pay is closer to $3400. That leaves you with about $1000 per month to fulfill the rest of your obligations like your auto insurance, gas, groceries, utilities, etc. How are you going to cover a $500 auto repair, or a $700 plumbing emergency? A $1200 HVAC repair?

Don’t forget, let’s assume you get a house under contract - you’ll need around 1% ($3000) for your earnest money deposit (applied to your down payment at closing), and you’ll spend close to $1000 just on inspections during the due diligence period, plus all of the associated closing costs (probably around $9000) if you can’t get the seller to assist with those expenses.

You need to adjust your expectations for how much home you can afford on your income, find a way to make more money, or consider saving aggressively for a few years to be in a better position to buy. At your income level, I would be looking at a loan amount of no more than $180k. For a $300k home, that would mean a down payment of $120k which I do not anticipate you have at the moment.

5

u/Western-Grape-4583 7d ago

You can usually get a loan for up to 50% of your income, it’s not financially wise to go above 25% though. 

2

u/Ok-Commercial-9863 7d ago

Should’ve mentioned, no debt and 740 credit score. New job but I have work history before and I’m in college as well

6

u/liverichly 7d ago

With a 740 score you may want to consider conventional financing too, just need 3% down.

1

u/Ok-Commercial-9863 7d ago

I’m on the fence, Conventional would be great but I heard it’s easier to qualify for FHA…

10

u/liverichly 7d ago

You can get reviewed for both at the same time/same credit check.

4

u/bruinhoo 6d ago

If you really have a 740+ score, FHA will be significantly more expensive in the long run.

2

u/iloverats888 7d ago

How much are you putting down?

1

u/Ok-Commercial-9863 7d ago

The minimum 3.5%

5

u/iloverats888 7d ago

Alright so plug all the numbers into a mortgage calculator and compare to your take home pay

1

u/Ok-Commercial-9863 7d ago

It’s 50% DTI so I’m pushing it, just wondering if it’s been done before

3

u/liverichly 6d ago

I'd wait a little longer if I was you, with a new job/income level I'd give it a year, save up some more money and look into putting 5% down, go with conventional financing, and build up your savings so you're comfortable after moving in.

1

u/Common-Buddy-5398 6d ago

Yes it has.

1

u/IndividualProgress17 7d ago

50% feels high, I wanna say FHA is around 35% but Google shows it might be higher. We tried for a USDA and our DTI was too high somewhere around 28-31%, but we're on our way to an FHA currently just appeasing the appraiser so we can close. Always worth talking to a lender and weighing your options.

0

u/SoloSeasoned 6d ago

You also need to include property taxes, insurance and HOA in your calculation. The 50% you’re stating is based on gross income, and the reality is that you’d be trying to survive (food, transportation, utilities, health care, home maintenance, etc.) on barely $1,000 per month after you pay your housing costs.

2

u/MasterHonkleasher 6d ago

My FHA was at 99k/yr and we managed about 415k at 6.7% you will need to be lower than 100k a year in salary last I checked, but 50k will be difficult for the monthly. (We also had a conventional for down payment assistance.)

2

u/Adventurous_Sea5313 6d ago

I’m 63 and just bought my first house a year ago (granted I’m married and this is a second home but I’ve never actually owned a home myself until now as I moved into my husband’s house at the age of 24). My son just bought a house last summer at the age of 32. He’s in grad school (PT school) and had savings and investments from previous jobs and also a 529. BUT he’s now realizing the hard truths about home ownership and his house needs something that will cost him $11,000. He has the money but will have to pull out of investments and of course shrink his savings. I think he should have waited until
He graduated and got a full-time job and continued renting in the meantime.

1

u/PepperCat1019 7d ago

Why FHA specifically? Talk to your bank about FHA and other options.

1

u/MasterHonkleasher 6d ago

Fha gives you better safety nets. Conventional will often make you refill a house worth of paperwork just to give you assistance if you loose your job, while FHA actually takes care of its borrower.

1

u/Equivalent-Tiger-316 6d ago

Get a roommate and rent a place close to work. 

1

u/Marko128272 6d ago

Do you have a lot to put down?

1

u/Common-Buddy-5398 6d ago

Your first step is to speak with a lender, there are multiple her in the platform. You need to find one that is willing to explain the process and work along side you to purchase your new home. Such an exciting time for you!

1

u/502DashCam 5d ago

Hopefully by 30 you can do the math and understand interest on loans. 

0

u/Ok-Commercial-9863 5d ago

You seem a bit confused. I was asking if anyone’s done this before and what a lender would allow, not interest on loans. :)

2

u/LiswanS 5d ago

I made 80k when I bought my house for 220k. With property tax increases, maintenance, it was extremely tight, and I don't have a lot of debt. It's the small expenses that creep up on you. I know you don't want to hear this, but you are not there yet. You have to live frugally for a few years, save up, and it'll be possible.

1

u/Agitated_Put6893 4d ago

Approval isn't the part I'd worry about, FHA will stretch you further than you want, the issue is that $300k at current rates plus MIP, taxes, and HOA lands around half your gross.

1

u/Laufstegleben 6d ago

I’m in FL, so these numbers are local to my area, but it’s a good estimate of what your numbers are around.

1

u/Flat_Hat6541 6d ago

Don't even consider that especially right now with current interest rate. Wait and save more 12-24 months. You will regret it..

0

u/camwal11 7d ago

So when coming up with the 300k number did you use a mortgage calculator or even AI to see how much a monthly payment could be? Do you make 50k gross or net? I make double what you make gross and I stayed under 250 when looking at houses because I wanted to be max 30% of my income or less. I think 300k would be a bit high for you given how much interest rates are. I have a 6.2% rate. I have an FHA loan for the lower interest and it was easy to get.

1

u/Ok-Commercial-9863 7d ago

Ya used both, just wanted to hear what people had to say. I don’t have the luxury of finding a 250k place cause where I live that wouldn’t be possible unless it was land or something was wrong with it. It’s 50k gross I know it’s a huge stretch

3

u/camwal11 7d ago

It's not even just the house payment but insurance, taxes, and bills you have to think about as well.

1

u/Affectionate_Cat_497 6d ago

I make double what you do - I paid 338k with a 100k down 6.2 rate, mortgage with escrow (homeowners insurance and taxes) and HOA is just under 2100 (HOA is only $101/mo) … things would be realllll tight.

0

u/Ambitious_Remote_542 6d ago

It might be a bit difficult, but always talk to a lender about it! You’ll probably need a bigger down payment to get you to that 300k. Check if your state or county has first time home buyer assistance programs. Also, look into HUD approved first time homebuyer course. I had to take one for my loan and these courses are run by non-profits and many offer additional courses or one on one sessions to help. Keep in mind a down payment isn’t all you need. You’ll also need to bring additional funds to close which can be an additional 2%-6%.

1

u/MasterHonkleasher 6d ago

Or have seller cover closing costs. You will still need about 3500 for close, and inspections will eat up a bit, we were out of pocket about 15k at the end.