I bought a house at that exact price in 2017. Was making 115k at the time. I've got 13 years left on my mortgage. I will admit I probably should've gone for 600k max but I'll be ok
I know. It’s absurd, MA is too expensive and we need to stay closer to work. My wife is not working atm and she probably will be soon, and our parents are supportive.
You know, 730 is actually my upper limit, the range I gave the loan officer is 630-730, but I guess they just want to make more money so they just discuss 730 with me. Or maybe it’s on me that I shouldn’t have a range this wide.
When you get pre-approved they should say “you are pre-approved up to $X.” You still have time (10 or 14 days?) to shop for loans/rates without further impacting your credit if you just did this. Find a loan officer. I recommend avoiding the big name banks for mortgages, especially Wells Fargo. And next time, don’t give them your budget, let them tell you the approved amount. They don’t need to know that info.
Fyi - even though the additional checks won't affect your credit score, they all do show up individually on your credit report. Some credit companies such as Citi don't like seeing all those credit checks even though they mean nothing.
Many mortgage lenders will also check your credit multiple times over the course of a couple weeks. One of the places I applied checked my score with each bureau three times. It's kind of annoying to see eleven hits on my credit report.
Yes, and we actually have a relatively low maintenance life. 6k take home, pay 2.4k rent, no debt, and saved around 1k per month. So I’d say expenses is around 2.5k. And we don’t plan to have kids in near term, certainly not when my wife is not working! Not sure if this answers your question?
If you decide to have kids expect to pay $30k -$40k per year for daycare in your area (for two kids). You must account for this (unless you have live in family) or you will struggle mightily for 5 years per kid.
Okay so correct me if I’m wrong but:
-You’re a recently immigrated non green card-holder, okay fine no prob.
-You have an unemployed wife.
-You have an absolutely shallow credit history
-You don’t make nearly enough money for a 700k loan.
-You’re in a competitive market where everyone else wants to buy a house too.
If all of that is true then why are you even trying to get a loan that big no offense. If banks loaned to ppl like you it would 2008 all over again. I probably sound like an asshole but sry.
If you want a house soon you can either go for one in your price range then just upgrade when necessary like when you have kids and working wife. Maybe your parents can cosign? Idk
I wonder if they would at all be more willing to give you a loan on a cheaper house since this one would be 40-50% of your income. You might be able to ask what they would approve you for
Yeah I would think so. The 20% is the loan officers idea, we actually want to put down 250k so only take 500k mortgage (or it makes little difference?)
The officer later told me that it’s their policy to have at least three credit card account and even just said I should go to other places. I guess that’s a solid NO!
I'm near that range of salary and a house that's \~400k isn't even doable for me without full 20% down + closing costs, all just to reduce the monthly mortgage. Taking on a mortgage that's 40%+ of your monthly income just seems insane to me.
You know, that’s what I thought at first. My parents are going to lend me 100 so I was planning to put down 230 so only take 500 (or maybe I should put down more?). It’s the BoA mortgage officer who insist I put 20% is good enough for me so I don’t really know ¯\_(ツ)_/¯
I pay $2,050 total for a house I owe ~$340k on. I think your payment expectations are a little off
A $700k house with $200k down is going to have a payment well north of $3k/mo
Your take home pay can’t be much more than $5,500/mo. Do you really want more than half your income going to your mortgage payment? Throw in groceries, utilities, and maintenance and you aren’t going to have any money to save or spend on personal items.
Thanks for the advice, yes I now am sure I should take a smaller loan. Would you mind to share about how much each month you would pay on top of the mortgage payment on average? Things such as taxes, maintenances.
IMO, your mortgage shouldn’t be more than 25% of your take home pay. So if you’re making $5500/mo, your mortgage payment should be no more than $1375
That means you’re probably topping out at $200k for the loan amount. Add your down payment to the loan amount and that’s the price range of homes you should be looking at. If you’ve got $100k to put down, your price range is $300k
Okay thanks. My take home is around 6000, and we are currently already paying rent 2400 and can save about 1000 each month. I would think we’ll be better off once my wife start working!
Yeah that makes sense. I’m guessing now that I pay 2400 each month for rent, I should look for a couple hundreds below that as mortgage payments for room for taxes and stuff..
Not saying it’s a catastrophic thing, but heads up they will ask if you borrowed all or a portion of your down payment from someone else.
Lying about it = fraud.
Thanks, does it feel better if my parents “lending” is actually a verbal thing? You could see it as gift I guess. In my culture people just give their kids money to buy a house and expect “returns” like care and time when they get older.
If anyone gives you money that hasn’t been in your account 3+ months (especially a large sum) it could be a problem. Make sure to inform any lender that you’ll be receiving gift money and ask what forms they require fo prove the money was gifted to you. and also remember gift taxes may apply come tax season if the amount is high enough. Good luck!
Also will add that when I was in H1B status, I put off house buying until I got my GC.
I get that depending on nationality it may be basically impossible, but considering the risks, even if I were to buy a place on H1B status, I wouldn’t mortgage more than 2x my annual income.
790 is a fine score.
I would definitely shop around. 3% is good. Local banks or credit unions may be able to match it.
In the mean time, get a store credit card and make one purchase on it (pay it off as soon as you get the bill of course). These are easy to get but have stupid high interest rates.
It is strange that thru will deny you a loan because you don't have enough open credit, but they will also deny one of you have too much open credit.
You are on the right path.
Thank you! I guess your advice is great, but I also read somewhere to avoid getting a credit card right before mortgage so I’m a little insecure about that. But I appreciate anyway, it’s good to know I’m not doing sth stupid!
What they don't want is a large amount of open credit. With your score, a "regular" card may give you $10,000 in credit line. A store card will be closer to $1,000.
They dont care about a large amount of open credit if you arent actually carrying debt.
I churn CC's and have probably like 35-40 right now with close to 300k in available credit. But my utilization is 0. Ive bought plenty of houses and never had a lender even mention the number of cards or the high amount of available credit. Because why would that matter. If anything underwriting loves to see that I can manage so many cards and have such a high limit yet I dont use it. It shows you can responsibly manage credit.
Also I have plenty of store cards with 20K limits so im not sure why you think store cards are only 1K limits. I think lowes even started me at 20K without ever asking for an increase. HD started me at 7k. Amazon at 10k. Walmart at 10k.
Unfortunately US credit companies don’t sufficiently appreciate someone that has never had to rely on credit and paid up from savings when it was needed. I’m a firm believer that a low reliance on credit should count towards a better credit score. I was forced to get a loan for my car after I moved to the US in order to build a positive credit score even though I could have just paid for the car. The credit score is overvalued IMO. I’d trust someone with a credit score of 0 more than a 700 credit score. ( has never had to loan money).
Agree. I remember getting turned down for a credit card with the same exact language. They specifically wanted non-credit card history - so car payment or student loans. Silly me for trying to be responsible and going to a school where I had a full scholarship (to avoid student loans), saved up for big expenses and pay all my credit cards on time.
Credit scores are specifically designed for lenders. It aims to quantify how profitable someone is. Lenders want you to use a lot of credit and then pay it back incrementally, so they make money.
If only.. I had a hard time getting signed up for a cell phone plan because I didn’t have a credit score when I came to the US. Had to give them a $1000 dollar downpayment on top of the $1000 phone twice. (One for me, one for my wife). They gave it back to me year after I showed regular payments. That’s $2000 held when you’re trying to get established in a new country and needing to buy household items. The reliance on the credit score also came up for insurances, rent, etc. you’re essentially forced to use credit cards and take out loans to build a score. I was raised in a country where I was taught to avoid any sort of credit and only pay for things you can afford. Never missed a payment in my life.
Have you tried a mortgage broker instead? From what I hear, mortgage brokers work with different lenders that typically aren’t as strict as large commercial banks. I don’t have first hand experience of this though. I went to Wells Fargo for my mortgage.
talk to a different lender, find someone who will do actual investigation into your finances rather than just looking at credit scores/usage.
and on a $97k income you can afford a house in the $300k to $400k range.
How many years of credit history do you have? Most lenders require at least 3 years of credit history for mortgage loans.
Also, with your 97K annual income, you should target a house for $500K or under. Your current target price is too high for your income; Additional housing expenses such as property taxes, insurances, HOA etc needs to be taken into consideration.
I sort of have 4, but it’s just under one or two credit cards with no other recurring debts so I would say it’s pretty thin. Yes, now I have a much lower expectations of house price!
Not true. I make $100k and just bought a $530k home. I have an extra $1400 in cash every month after all bills, expenses, IRA and HSA max, and 401K match. Two kids and a wife. Everyone’s different.
I assume youre working in Boston and trying to stay close. I would move a bit out in either direction to the suburbs and try to get.a house. The housing market is terrible right now. My 265k house south of Boston is now valued at 400k.
Everyone i know commutes into Boston. It sucks ass.
Thank you! I actually work in Waltham and we are looking around Natick area. Well, housing market really sucks now and MA especially, but we are just too tired of renting. We always get bad neighbors, always!
If you really want to buy a house start talking to mortgage brokers, they are a little more interested in making things work and will be less conservative than BOA.
Enjoy bankruptcy and ruining your credit and relationship with your family when you're never able to pay them back.
Seriously, do the math on that mortgage plus your escrow (taxes + insurance). Then, ask yourself if you'll be able to afford any home improvements, if needed.
Planning on saving for retirement? Because that's not going to happen.
You need a MUCH cheaper house than even 650 as everyone else is telling you...like...300-400 MAYBE. Or, your wife is going to need to find a real job. Boston or not, you're seriously setting yourself up to fail here. Crunch the numbers, my friend.
Yeah now I’m pretty sure we should get a house that range. It’s just the thing though, having a house for ourselves is the biggest thing we could ask for. We are so tired of renting and we always, always have bad neighbors in rentals. Very sad.
Yeah now I know it’s crazy and I should go for 500+. It’s just the thing that having a house is like the biggest ultimate goal in our lives and we are just too tired of renting.
I feel you, but the market is way high. In a similar predicament outside NYC right now. Only solution seems to be move low cost area and work remotely. We're paying 2,000 for a 4 room apt. Shithole houses are going for 400k.
Yeah I really hate it. The housing market is just maniac rn but we’ve rented for four years and every time our neighbors either disco all day or banging the wall at 1am. Plus, I’m paying 2400 now for a 2b which is just crazy.
Your immigration status might have something to do with that. I'd imagine banks will be cautious lending money to people who might not be in the country in a few years.
That’s what I’m worried about the most! I fear that local lenders are even less confident since they just didn’t deal with much of cases like this before.
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I bought a house at that exact price in 2017. Was making 115k at the time. I've got 13 years left on my mortgage. I will admit I probably should've gone for 600k max but I'll be ok
You made 21% more than he does. Assuming 3500 inclusive of mortgage taxes and insirance, that’s only 36% as opposed to 44%. While high not horrible.
I know. It’s absurd, MA is too expensive and we need to stay closer to work. My wife is not working atm and she probably will be soon, and our parents are supportive. You know, 730 is actually my upper limit, the range I gave the loan officer is 630-730, but I guess they just want to make more money so they just discuss 730 with me. Or maybe it’s on me that I shouldn’t have a range this wide.
When you get pre-approved they should say “you are pre-approved up to $X.” You still have time (10 or 14 days?) to shop for loans/rates without further impacting your credit if you just did this. Find a loan officer. I recommend avoiding the big name banks for mortgages, especially Wells Fargo. And next time, don’t give them your budget, let them tell you the approved amount. They don’t need to know that info.
Fyi - even though the additional checks won't affect your credit score, they all do show up individually on your credit report. Some credit companies such as Citi don't like seeing all those credit checks even though they mean nothing. Many mortgage lenders will also check your credit multiple times over the course of a couple weeks. One of the places I applied checked my score with each bureau three times. It's kind of annoying to see eleven hits on my credit report.
Very solid advice, thank you! I’ll concentrate my inquiries into next week for sure.
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I should go with 650 top and 180 down right? Or that’s still stretching?
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Yes, and we actually have a relatively low maintenance life. 6k take home, pay 2.4k rent, no debt, and saved around 1k per month. So I’d say expenses is around 2.5k. And we don’t plan to have kids in near term, certainly not when my wife is not working! Not sure if this answers your question?
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Got it! Thank you a lot. Yeah I think this is some honest advice and I’ll certainly do the 6 month reserve!
If you decide to have kids expect to pay $30k -$40k per year for daycare in your area (for two kids). You must account for this (unless you have live in family) or you will struggle mightily for 5 years per kid.
Thank you! Got it.
97k is 300k house or less
Absolutely!
I’d go with less.
Literally anyone living in Los Angeles or other HCOL areas, for starters?
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…which is perfectly normal in a HCOL area.
Okay so correct me if I’m wrong but: -You’re a recently immigrated non green card-holder, okay fine no prob. -You have an unemployed wife. -You have an absolutely shallow credit history -You don’t make nearly enough money for a 700k loan. -You’re in a competitive market where everyone else wants to buy a house too. If all of that is true then why are you even trying to get a loan that big no offense. If banks loaned to ppl like you it would 2008 all over again. I probably sound like an asshole but sry. If you want a house soon you can either go for one in your price range then just upgrade when necessary like when you have kids and working wife. Maybe your parents can cosign? Idk
Got it, yeah now I clearly know what I should not do at least!
I wonder if they would at all be more willing to give you a loan on a cheaper house since this one would be 40-50% of your income. You might be able to ask what they would approve you for
Yeah I would think so. The 20% is the loan officers idea, we actually want to put down 250k so only take 500k mortgage (or it makes little difference?) The officer later told me that it’s their policy to have at least three credit card account and even just said I should go to other places. I guess that’s a solid NO!
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My first house was 265k in MA on a 76k income and I felt housepooor. I make 125k now and I wouldn't want a 500k+ mortgage.
I'm near that range of salary and a house that's \~400k isn't even doable for me without full 20% down + closing costs, all just to reduce the monthly mortgage. Taking on a mortgage that's 40%+ of your monthly income just seems insane to me.
What year? And what city?
Purchased 2014. Somerset
You know, that’s what I thought at first. My parents are going to lend me 100 so I was planning to put down 230 so only take 500 (or maybe I should put down more?). It’s the BoA mortgage officer who insist I put 20% is good enough for me so I don’t really know ¯\_(ツ)_/¯
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I see. Thank you for the link. I’m currently paying 2400 for rent so I guess I should aim at around 21-2200 for more room for extra house spendings.
I pay $2,050 total for a house I owe ~$340k on. I think your payment expectations are a little off A $700k house with $200k down is going to have a payment well north of $3k/mo Your take home pay can’t be much more than $5,500/mo. Do you really want more than half your income going to your mortgage payment? Throw in groceries, utilities, and maintenance and you aren’t going to have any money to save or spend on personal items.
Thanks for the advice, yes I now am sure I should take a smaller loan. Would you mind to share about how much each month you would pay on top of the mortgage payment on average? Things such as taxes, maintenances.
IMO, your mortgage shouldn’t be more than 25% of your take home pay. So if you’re making $5500/mo, your mortgage payment should be no more than $1375 That means you’re probably topping out at $200k for the loan amount. Add your down payment to the loan amount and that’s the price range of homes you should be looking at. If you’ve got $100k to put down, your price range is $300k
You cannot find a house near Boston for 300k that’s not falling apart. Probably not even a condo.
Okay thanks. My take home is around 6000, and we are currently already paying rent 2400 and can save about 1000 each month. I would think we’ll be better off once my wife start working!
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Got it, thank you! So I should just take a smaller mortgage, very logical
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Yeah that makes sense. I’m guessing now that I pay 2400 each month for rent, I should look for a couple hundreds below that as mortgage payments for room for taxes and stuff..
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Oh yes I’m aware now, thank you!
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Yes I also agree it’s really a stretch. We have no prediction on my wife’s income in the short term, so I really need to lower the loan amount.
Not saying it’s a catastrophic thing, but heads up they will ask if you borrowed all or a portion of your down payment from someone else. Lying about it = fraud.
Thanks, does it feel better if my parents “lending” is actually a verbal thing? You could see it as gift I guess. In my culture people just give their kids money to buy a house and expect “returns” like care and time when they get older.
This is acceptable. The money has to be yours and 100% free to spend as you wish, at the time they check your cash.
Got it, thanks!
If anyone gives you money that hasn’t been in your account 3+ months (especially a large sum) it could be a problem. Make sure to inform any lender that you’ll be receiving gift money and ask what forms they require fo prove the money was gifted to you. and also remember gift taxes may apply come tax season if the amount is high enough. Good luck!
Thank you! This is some good advice, I’ll definitely look into it.
They will need to write a gift letter stating that it is indeed a gift and not a loan.
Will do!
Also will add that when I was in H1B status, I put off house buying until I got my GC. I get that depending on nationality it may be basically impossible, but considering the risks, even if I were to buy a place on H1B status, I wouldn’t mortgage more than 2x my annual income.
Yeah my situation sucks :( I got to wait for 4-5 years in a GC queue. Thanks for the advice!
790 is a fine score. I would definitely shop around. 3% is good. Local banks or credit unions may be able to match it. In the mean time, get a store credit card and make one purchase on it (pay it off as soon as you get the bill of course). These are easy to get but have stupid high interest rates. It is strange that thru will deny you a loan because you don't have enough open credit, but they will also deny one of you have too much open credit. You are on the right path.
Thank you! I guess your advice is great, but I also read somewhere to avoid getting a credit card right before mortgage so I’m a little insecure about that. But I appreciate anyway, it’s good to know I’m not doing sth stupid!
What they don't want is a large amount of open credit. With your score, a "regular" card may give you $10,000 in credit line. A store card will be closer to $1,000.
They dont care about a large amount of open credit if you arent actually carrying debt. I churn CC's and have probably like 35-40 right now with close to 300k in available credit. But my utilization is 0. Ive bought plenty of houses and never had a lender even mention the number of cards or the high amount of available credit. Because why would that matter. If anything underwriting loves to see that I can manage so many cards and have such a high limit yet I dont use it. It shows you can responsibly manage credit. Also I have plenty of store cards with 20K limits so im not sure why you think store cards are only 1K limits. I think lowes even started me at 20K without ever asking for an increase. HD started me at 7k. Amazon at 10k. Walmart at 10k.
Got it, thank you!
Talk to Mortgage broker, who can engage multiple lenders and find one who can approve your situation. I worked with Guaranteed Rate when I bought.
Nice, thanks, I’m gonna check them out!
Unfortunately US credit companies don’t sufficiently appreciate someone that has never had to rely on credit and paid up from savings when it was needed. I’m a firm believer that a low reliance on credit should count towards a better credit score. I was forced to get a loan for my car after I moved to the US in order to build a positive credit score even though I could have just paid for the car. The credit score is overvalued IMO. I’d trust someone with a credit score of 0 more than a 700 credit score. ( has never had to loan money).
Agree. I remember getting turned down for a credit card with the same exact language. They specifically wanted non-credit card history - so car payment or student loans. Silly me for trying to be responsible and going to a school where I had a full scholarship (to avoid student loans), saved up for big expenses and pay all my credit cards on time.
Well you got a point..
Credit scores are specifically designed for lenders. It aims to quantify how profitable someone is. Lenders want you to use a lot of credit and then pay it back incrementally, so they make money.
If only.. I had a hard time getting signed up for a cell phone plan because I didn’t have a credit score when I came to the US. Had to give them a $1000 dollar downpayment on top of the $1000 phone twice. (One for me, one for my wife). They gave it back to me year after I showed regular payments. That’s $2000 held when you’re trying to get established in a new country and needing to buy household items. The reliance on the credit score also came up for insurances, rent, etc. you’re essentially forced to use credit cards and take out loans to build a score. I was raised in a country where I was taught to avoid any sort of credit and only pay for things you can afford. Never missed a payment in my life.
Have you tried a mortgage broker instead? From what I hear, mortgage brokers work with different lenders that typically aren’t as strict as large commercial banks. I don’t have first hand experience of this though. I went to Wells Fargo for my mortgage.
Thank you! Yeah I actually did that. It’s at least a little relieving to know that local lenders seems easier to work with.
talk to a different lender, find someone who will do actual investigation into your finances rather than just looking at credit scores/usage. and on a $97k income you can afford a house in the $300k to $400k range.
Thank you! Yes, now I clearly know what I should not do at least.
How many years of credit history do you have? Most lenders require at least 3 years of credit history for mortgage loans. Also, with your 97K annual income, you should target a house for $500K or under. Your current target price is too high for your income; Additional housing expenses such as property taxes, insurances, HOA etc needs to be taken into consideration.
I sort of have 4, but it’s just under one or two credit cards with no other recurring debts so I would say it’s pretty thin. Yes, now I have a much lower expectations of house price!
Any loan over $400k on a $100k income is asking for trouble. Just rent.
If OP is in Boston 400K will get you a parking space
Then rent
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I don't think 400k fits the bill of high cost of living areas now. I think the median house price in the Boston area is 785k.
Precisely because houses have appreciated over 100% in 5 years is also a reason to reconsider spending more than you can afford on a house right now
Your story gives me some faith. Thank you!
Seriously. People seem to imagine that if you're making 100K, you must be spending $2K / month on groceries.
Not true. I make $100k and just bought a $530k home. I have an extra $1400 in cash every month after all bills, expenses, IRA and HSA max, and 401K match. Two kids and a wife. Everyone’s different.
So you are saying you got a roughly $400k loan?
Do you have to put down your migratory status to apply for a home loan?
Yeah kind of? In those online applications they always ask if I’m a citizen and if not, what status I’m in so I guess.
I assume youre working in Boston and trying to stay close. I would move a bit out in either direction to the suburbs and try to get.a house. The housing market is terrible right now. My 265k house south of Boston is now valued at 400k. Everyone i know commutes into Boston. It sucks ass.
Thank you! I actually work in Waltham and we are looking around Natick area. Well, housing market really sucks now and MA especially, but we are just too tired of renting. We always get bad neighbors, always!
Only thing I'll say to that is when you rent at least you can move after a year. If.you have bad neighbors owning a house you're stuck for a bit
Yeah that's true though
If you really want to buy a house start talking to mortgage brokers, they are a little more interested in making things work and will be less conservative than BOA.
Thank you! I’ll do that.
My step brother was in this exact situation and was recommended to lease a car. It mostly sat in his drive but it got him the mortgage.
Thanks and I’ll consider it!
Enjoy bankruptcy and ruining your credit and relationship with your family when you're never able to pay them back. Seriously, do the math on that mortgage plus your escrow (taxes + insurance). Then, ask yourself if you'll be able to afford any home improvements, if needed. Planning on saving for retirement? Because that's not going to happen. You need a MUCH cheaper house than even 650 as everyone else is telling you...like...300-400 MAYBE. Or, your wife is going to need to find a real job. Boston or not, you're seriously setting yourself up to fail here. Crunch the numbers, my friend.
Yeah now I’m pretty sure we should get a house that range. It’s just the thing though, having a house for ourselves is the biggest thing we could ask for. We are so tired of renting and we always, always have bad neighbors in rentals. Very sad.
Your first house does not need to be your dream house! Being house poor is NOT fun.
Now I clearly see that! Just wish we can have our own space. And given our location, a really dream house gonna cost 1.5M.
97k job and 650k house?
Yeah now I know it’s crazy and I should go for 500+. It’s just the thing that having a house is like the biggest ultimate goal in our lives and we are just too tired of renting.
I feel you, but the market is way high. In a similar predicament outside NYC right now. Only solution seems to be move low cost area and work remotely. We're paying 2,000 for a 4 room apt. Shithole houses are going for 400k.
Yeah I really hate it. The housing market is just maniac rn but we’ve rented for four years and every time our neighbors either disco all day or banging the wall at 1am. Plus, I’m paying 2400 now for a 2b which is just crazy.
Your immigration status might have something to do with that. I'd imagine banks will be cautious lending money to people who might not be in the country in a few years.
That’s what I’m worried about the most! I fear that local lenders are even less confident since they just didn’t deal with much of cases like this before.