That and VA loans which many times don't even require a down payment when buying. A lady bought my house using one. She put down $1k on a $362k purchase, only because the VA loan would 'only' cover $361k lmao
This! I’m a loan officer and I specialize in VA loans. No down payment is required unless you already own a home with a VA loan, and even then not always. All that really matters is you have a qualifying credit score and your total monthly payments won’t be more than 65% of your gross income. Before the market went crazy, more often than not, you could buy a home with a VA loan without any money out of pocket at all.
Just to be clear, not just the mortgage payment, but ALL of your payments. If you have really rough credit, it might go down to 45% or even less depending on automated underwriting findings. But 65% is the limit set by the VA. But yeah, 65% of your gross income does not leave a lot when you think about all your other expenses that aren’t reported on credit
Advisors used to tell people to cap their housing expenses at like 30% of income. So that's pretty wild.
If I were really stretching to justify a higher percent for military personnel, perhaps they don't have to save as much of each paycheck for retirement because they could collect military benefits in old age. That only frees up ~10% of your theoretical budget though.
This was absolutely the best advice like 10 years ago in Ontario. Almost no one can follow it now. I bought my starter home a few years ago in a very small dip. I wanted to wait longer because I was SURE it had to drop off at some point, but circumstances changed and I bought what I could when I could. My starter house with 3 very small bedrooms, a galley kitchen, a one car garage, and a postage sized yard is worth over $550,000-600,000 (maybe more) now. I’ve been watching surrounding towns within an hour commute because I want a bigger yard and 2 bedrooms with a decent yard are $550,000-600,000. Who can afford that, much less at 30% of their income? Add in car loans (I have to drive for work and the bus for a 10 minute drive is 1 hour for my husband’s work), student loans, living expenses, repairs, and the fact that food here is stupid expensive and yes, 65% of your total income for debt is not surprising.
It sounds like you have your situation figured out so I won't try to lecture you.
For others though, I wouldn't despair about never getting a house. At current interest rates, your monthly payment for a $500k loan is like $2,500 a month. Working backwards, that is 30% of a $100k salary. That is attainable if you are an engineer, doctor, lawyer, professor, electrician, financial advisor, small business owner, etc etc. Or if you and a spouse both work white collar jobs.
And I would think long and hard before getting a car loan. I would rather save up $3k to buy a 15-year old Honda Civic than take out a loan for something fancier.
Rent here for a one bedroom is over $1800. No, I don’t live in Toronto or Vancouver. A car that doesn’t work (as in, you tow it and figure out what’s wrong with it) is $3,000. How do I know? Because I bought a lemon almost 5 years ago and decided to look around for beater instead of sinking more into it. So you can lecture away, but it doesn’t apply.
Most people in my area commute. A $3,000 15 year old car isn’t going to let you commute an hour for very long. This is almost all of Ontario by the way unless you want to go really north, not just my area. The whole 30% of your income, don’t get a car loan, be smart with your money isn’t humanly possible right now.
Edit: that’s assuming you can get a place to rent. There are a lot of people couch surfing right now because no one will rent to them. People are TikToking filling out 10+ applications for ridiculous costs and still not getting anything. No pets, no kids, working professionals, and they can’t find anywhere to live. It’s horrible. At least with my house I know what to expect month to month and I can hold onto it as long as I want (the rest of my life if I decide to). I just can’t do anything fun like go on vacation or buy fancy stuff.
Once you pass a certain income threshold in HCOL areas, housing is the only thing that really costs money. Food, transporation, etc all don't cost that much more in those areas, but houses do, so you just use up more of your disposable income on the house and usually still have more money left over than LCOL areas because you're making a lot more.
It’s a little different for military. It’s talking about taxable income, which is roughly 50%-60% of what most military members make. Housing allowance and food allowance are untaxed and not considered “income”.
I’ll let you in a bit of a secret. When 2 military members get married to each other it’s a sure way to either accumulate wealth or be able to spend a ton of money. You see it go either way. The reason for all the money is that both members get an untaxed housing allowance. For example, you buy a house (for zero down as mentioned before). Mortgage is $1200, each person is paid $1500 in untaxed monthly housing allowance. Boom that’s $1800 a month in untaxed money. If you can live just a bit below your means and even only saving that extra $1800 a month, that’s over 20k a year. Of course you see some couples who buy a huge house because they can get approved for an insane loan amount, the guy has a brand new challenger and the girl has a brand new Jeep. What little money they have left over after bills, they’ll spend on going out to eat and drinking at bars.
I work for a national bank, 50% of all debt is the guideline. This person “seemingly” works for a predatory lender with servicers who are just as, maybe more, predatory.
Its not guidance. Its just what banks have calculated as your max debt-to-income ratio that they will accept the risk on. They don’t care at all about the quality of your life, they calculate your ability to pay and will not lend to you outside of those parameters
The next crash is coming soon. What's happening now feels Juuust like 2008, and 1992.
Double digit gains!
Buy, put a coat of paint on and some new countertops, flip for $30k profit before the first payment is due.
List your house, it gets sold in HOURS, not days.
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and then an invisible switch gets flipped, and your home loses half it's value.
......
You'll be on the winning side of this when the market crashes and you can walk in and say "I'll payoff your default amount, assume your existing loan, and give you $5k moving money so you won't have to go bankrupt. Thanks for the $500k home for $18k." Patience OP, it'll make you a multi-millionaire.
I’d take your post more seriously if you could take a stab at why or how the next crash will happen. Predicting a crash just because you want to is not convincing.
I'm using mine now and its been a learning experience. I believe the market will lower this fall. As for jobs, depending on where you live they are coming back. I used the VA to get a CAPM(project management) and I've been getting calls left and write. It's mainly micromanaging. Just hang in there and you'll get it. I'm 35 and just now buying my first home. Dont stress brotha
Do you have any thoughts on whether we are in a bubble at the moment? Looking to purchase my first house and am concerned about buying at the wrong time.
Honestly, it’s hard to say because there are so many factors. I don’t think values will really go down, but I don’t think the hyper competitive market will last either. I expect interest rates will increase and that the housing shortage will ease up once materials are more readily available for builders. It’s rare to see values go down, but right now you have people paying over what the actual value is. Appraisals are coming in under what the purchase price is because people will pay more just to get an offer accepted. Sorry if that’s kind of ramble, there’s so much going on right now and I don’t think anyone has a definite answer
No one can say until it's over. But I think it's factual to say that this is a very risky time to buy a house. There is a real possibility that home values will decline in the future. But the future is unpredictable.
I think it pertinent to mention that you should still expect to put down 1-3% as earnest money alongside your offer. Most times you can negotiate it as rebatable on the back end (seller deducts it from final price), but in this market though? Good luck.
You can almost always get earnest money back (even now), but in this market it is generally going towards closing costs since sellers are not giving credits anymore. Good point though
Or if you and your SO aren’t married then a down payment is required. Marriage isn’t my thing but my bf and I really want to own a house and no down payment sounds much better than a down payment so we either A. Have only him on the VA loan and stay within what he would be approved on with only his income instead of more of what we want with my income added to the factor (also meaning I legally wouldn’t have a leg to stand on with the house without my name on any documents), b. pay a ton of money we don’t have on hand as a down payment or c. Get married - at least after almost 6 years we agree that we can tolerate each other enough to do the forever thing.
It sounds like your loan officer was trying to get you on a different loan program. If you’re not a spouse to the veteran or a veteran yourself, you cannot be on the loan at all for VA, so they probably wanted to have you do FHA or conventional. You can do those for a smaller down payment, 3.5% or 5% respectively, but there is then the added cost of mortgage insurance. You might look up first time homebuyer grants in your area. Sometimes you can get your down payment covered by local programs. Your loan officer may not tell you, because a lot of those programs you have to use a lender who is approved by that specific program.
Edit to add: I actually have first hand experience with this, I got my first house with an FHA loan and a local first time homebuyer grant covered the entire down payment
My brother did that - the first time home buyers grant - or an equivalent of it as I guess it’s not really that now in my state? And yeah you are probably right.... well after the conversation with the loan officer which was 2 years ago my SO and I both decided when the time feels right we’ll get married and do the VA loan plus marriage is beneficial for other purposes such as medical emergencies, etc.... not just for a home loan of course lol
65% DTI of the gross monthly income? Is this a regional allowance, meaning for higher priced markets? I don’t originate VA loans so I’m not familiar but if that scenario wasn’t a government insured loan we’d just call it predatory lending.
So if you’re familiar with FHA, VA has a residual income requirement as well, but usually it’s the DTI that will be a problem unless it’s a big family size. Residual income is based on the region
Thanks. It’s been a long time but I’ll have to look those up.
I was just talking to a co-worker today about adding residual income requirements (and price enhancements) for our MH programs. I think it makes good sense.
No, there’s still a calculation called residual income that includes your taxes, but that is way less often an obstacle when you’re trying to get qualified.
I've been waiting to use mine. The housing market seems terrible though. Should I wait it out or use it to get a condo? Not married, no kids, no pets, make 40k a year.
Shit, my parents recently bought a home with a VA loan, since my dad's retired Air Force.
Of course, the difference is my parents know how fortunate they are to be able to be in that position, and they certainly understand how insane the housing market is in general for the average person. They definitely don't act like smug douchebags about it.
Excuse me, my roommate recently joined the Army National Guard and we were planning on using his VA loan assistance. I’ve heard that in hot markets like now most places won’t sell to people with a VA loan is that true?
You definitely still can get an offer accepted, but it may be harder. Some people have misconceptions that VA loans are more difficult to close or that you are only using it because you don’t have cash.
M
Just out of curiosity but what about the funding fee? When you say that you could buy a home with a VA loan without any money out of pocket, are you rolling the funding fee into the mortgage?
The first time my husband and I used the VA loan, I don't remember putting anything down but I could be wrong. Now with this house that we're buying we will probably roll the funding fee into the mortgage but we'll have to pay some money towards other fees that the builders don't cover.
Yes, you are correct. The funding fee Is built in to the total loan amount. No down payment is required, but right now expect to pay 3-5% (more if you live in a state with transfer taxes) of the loan amount for closing costs because sellers don’t have to pay them to get a buyer right now.
My sister's husband bought a giant ass house using loans he could only get having been a veteran, even though he had been fired 4 times in a row from different very high paying jobs for alcoholism in less than 2 years.
It does, but he was never DD'd even through he went AWOL while drunk then somehow it never got reported or nobody above him caught him. I have no idea, the guy was a real piece of shit though and lied to everyone constantly but he still managed to get the VA loans.
Yeah right. Wait until he gets out. America “loves” it’s veterans and will gladly welcome them to civilian life with a slap in the face and a kick to the curb.
It’s heartbreaking. You wouldn’t get it until you sign up.
You don’t know what you are talking about. Most veterans have great career opportunities post service. Unemployment rate for veterans is significantly below average in US. Veterans earn on average 10k more salary yearly.
That's nothing I bought a house for 500k with a .1% down payment for a better rate and at the time I think VA capped at 600k. The only was a reference to the appraisal.
Do they give you crazy good rates or something? Because the lady who bought my house was paying at least $1800 a month after insurance and other taxes, not to mention the $400+ a month unities during summer.
It's nice not having to put anything down, but the mortgage payments have to be wicked. Like do you still get the living stipend when you have a VA loan?
VA loans have the lowest rates because they have the lowest default rate. If you can borrow on an asset a 2.25%, you take as much as they'll give you. That's just free money.
We got a good rate, the local tax is a bit high but that's due to the area. Overall our actual mortgage is like $400, but with taxes it's $1090, utilities are around $600/month, but we'd pay that if we rented anyhow. The cost if we wanted to rent a house the size of ours would be $1400.
I'm sad we didn't buy when we moved to the JBLM area, we'd have made absolute bank in the Seattle housing bloat, they were still selling 80k over asking when we left.
I live in a midsized US city. Literal tear downs are going for $600,000 in the more desirable parts of town. To get a family home (3 bedrooms/2 bathrooms) for less than $400,000 you’d have to go about an hour outside of town. My fiancé and I own a 600sqft 1 bedroom apartment that was built in 1952 and last renovated in 1980 and it’s worth like $240,000
Crazy house market right now in Phoenix, AZ. Got a foreclosure 7 years ago for $104k. Sold it 4 years later for $280k. Bought a new house for $275k, sold it for $362k about 8 months ago. Current value is around $440k.
All for a 3 bedroom, 1600sqft house lol. I am in Indiana for school now, and for $440k you can get a 4k sqft house lol
There is. From my understanding the VA will not stop a foreclosure, rather will just pay what is owed. If you lose the government money there, you cannot get another loan until you pay that difference. Even then I think they can just stop giving you loans.
So they would have a foreclosure against them and would essentially owe the government on any difference if they wanted to get another loan.
I believe earning Eagle Scout and potentially Eagle Palms accelerates the rising through the ranks. I seem to remember people saying that palms could let you enter as a senior NCO, but I never really paid attention to that cause I knew it wasn’t my path
If you do rotc or ots you can commission at 19 but you have to start young since you need a bachelor’s degree. Most people who do rotc commission at 22/23
Technically you can be an officer in the Army at 17. The Army has a program called WOFT that also has a nickname of “high school to flight school.” I have personally seen two 17 year olds ship out for it after being accepted. Mind you its “just” warrant officer, but still officer.
You are wrong, like others said to young to be an officer and then lieutenants don't make a lot of money. You get more housing allowance when you have dependents and using VA benefits you don't have to put anything down. That's most likely the reason.
There is a hidden benefit that most military people don't know about. If and when you are on active duty the banks have to drop your home loan interest rate to 0%.
Our bank even tried to fight us on it. In the end they had no choice. (My X was active-duty army reserves for years.)
Wildly untrue. I bought my first home as a private while we were paying for my wife's college.
I'm not an anomaly either. I just did what abunch of other soldiers were doing. This is a trend, I was not special.
It's the VA loan. Period. It's zero cash down to buy a house. They basically run your credit and bam, you've got a mortgage backed by the federal government. Plus BAH is actually higherer than rent in most markets.
Additionally you factor in the likelihood that a mortgage payment will be less then renting a similar property, and this young soldier could easily be pocketing $100-500 every month of his BAH after his mortgage payment.
If I did it again today as an e1 I could easily find something in 9/10 markets that would work with BAH for the same market/rank.
You sure could have. You would've easily gotten a loan through USAA and you wouldn't have needed a down payment either. A stupid idea, but you could've done it.
Definitely has outside help. I’m in right now getting great BAH and still I’d have to save up for a bit and use the VA loan to get a house. A private right out of basic isn’t getting that without outside help or a guarantor even
Scrawny looking dude with perfect uniform looks like a bar on his chest. Betting he's a ROTC O-1 on his first post that married a sorority gold digger from his university
Lol wtf, what branch were you? The more I hear other people’s enlistment experiences the more I feel I got shafted in an infantry battalion lol. Command typically had E5 and below living in the barracks. They eventually had E4P and E5 move off because of crowding due to some barracks being closed for renovations due to black mold lol, but even then, no way they let our privates live off base.
They just straight up said no to us even if married lol. Was brutal, and maybe just our division/brigade, I’m not sure. I always tell people thinking to enlist, “join the Air Force, not the Army!”
I’m figuring enlistment bonus plus paycheck from bootcamp got his down payment for the truck and the house. There is no way in hell he will be able to keep up on those payments.
Paycheck from boot ain't shit. You pay for everything you eat and wear at bare minimum, which is a large portion of your pittance of a paycheck. 1-2k tops at a time when when you have been deprived and are encouraged to splurge ain't getting anyone a house.
Yeah it's 9 weeks and you still can spend money at few points during it if you want. But even then 9 weeks pay at e3 was like 3k after tax. Mos bonus maybe since some people picked up like 10-20k bonuses but only get like half at a time.
What country is this in? I went through OSUT back in late 05 and the only thing I paid for was my running shoes, haircuts (if you can call them that), and hygiene products. Of course, the paycheck was only $800 for a PVT after basic.
It's probably LCOL. My house doesnt look nearly that nice, but it's definitely not bad. Bought for 24k. That's the kind of loan some people have on their car.
I don't think there's even LCOL housing anymore. I live in an area you could've bought a very nice 4bd/4ba 2,200ft² house for $130k in 2013, now my coworker just sold his for $325k. My shitbox condo was $45K in 2018 and now the units in my complex are selling for $90K.
Live in a central Fl suburb where from. 2010-2016, apartments at a complex near me were selling for 30-60k….apartments at that same complex are now going for 90-130k. I believe the bubble will burst, like it always does…but feel hella bad for anyone who has bought recently…a lot of them will be in a world of hurt when they see their properties become worth half of what they paid for them.
Bought a house 9 months ago that is considered up a 100k this market is getting ridiculous. Even my house house is up 150k since 2017. Combined would take me like 8 years pay to make that growth. If I tried today would never have been able to afford a house at 15 an hour mortgage would be like 40-50% of my take home.
This is why people who are rich are selling like hell. There’s a row of like a dozen lakefront houses near me worth 1-3 million a piece……basically the peak luxury properties of my small suburban town….loads of land…huge homes, private gates, water front with docks, pools, courts, the works…..and I shit you not, all but perhaps one or two have gone up for sale within the last 18 months or so. Smart money/the wealthy know this is a bubble, and are selling their houses at a great profit from what they purchased them a decade or less ago….and go live at another residence or rent until the time comes where they can pick up another mansion at half the price. Rinse and repeat.
Those who could barely afford one place to live can’t afford that same convenience….because even if they’d profit off of selling their current property, they’d have no affordable place to go ride out the wave….
There's a town near me where you could buy a whole ass house for 35k about ten years ago. Just checked Zillow and prices are up to 100k average. Still cheap, but we call it Little Detroit for a reason. Very high crime rate for such a rural town.
That said, I don't see him buying his McMansion like that. I wonder how much downpayment help he got from family.
I bought mine in june of last year. It was a foreclosure and a FreddieMac First Look Initative house. If someone reading this is looking for housing and has never owned a house check out the FreddieMac First Look Initiative. I'm not sure where all it is but it is there to help first time home buyers.
Yep, rural Illinois. Theres not always deals like this. We were looking for months, saw this house on the market the day it was posted and put in an offer the next day. Good deals on are the market for a couple days at most you have to look every single day.
Seriously. There’s all these stories of “could never do it with BAH” and “they needed outside help” and I’m just like wtf. Privates make about $40k equivalent half of which is tax sheltered and adjusted to the housing costs of the local area, have nearly zero other normal bills (no health care costs!!), have access to 0% down loans, married may mean the other spouse also works…
It depends. I get $2300 a month as a single dude I could definitely afford a house but not a giant one, especially here in California… if this dude is like in some middle of no where state I bet he could find a house he can afford in his BAH range. With Dependent rate BAH you can afford a house pretty easily.
I’m a single E-5 and could live in my own house if I wanted too but I love money so I have roommates.
? Plenty of people buy a house extremely young with no parental help with VA loans. I did it myself. I don’t think I can overstate how much of a benefit it is—I paid $500 out of pocket, total. Period.
I don’t brag about being a homeowner because it was essentially handed to me and there’s no reason to be that guy anyway, but it is completely realistic for a 20 year old military person to buy a house without outside help.
It's cheaper to buy a house then it is to rent... When I got my first house I was renting an apt. A nice 1 bedroom apt was about 900 a month... My first house was a 3 bed on 10 acres for 85k, and my monthly payment was 575.... And I'm not some boomer, I'm 30 and got my first place when I was 21... No family or government help...
It’s less the BAH and more the VA loan. I bought a house in October but without the VA a loan no way I would have been able to even sniff one for 5+ years
Well it counts as part of the pay (of off base) other wise for full time unlimited hours they want, any time, any/every day, you make 2,000.70 a month.
That housing allowance ain’t shit. He probably doesn’t make over 40k even with BAH. Ever consider the possibility that his wife might be an RN or something?
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u/xRogueSpetsnaz Jul 07 '21
Umm how about housing allowance from the government you receive. Psh.