Rich, I have a loan question.

[Tiffy]

Hi! I am going to be buying a house in a couple of months. My credit score is excellent and I bring home a little over 3300/month pretax. I found a house that I love, but it's a fixer upper so I would need additional money to make repairs on it. Someone mentioned to me that I should look into getting a 203k loan. I'm not really sure what that is or how hard it would be to qualify for it?

I'm hoping to get the house for 135000 - 140,000 and then get approved for an additional 15,000 that I can use for repairs. Does this sound like something I could get approved for? I only have about 5,000 for a downpayment and the seller is covering the closing costs. I have no other monthly expenses.

Thanks for any info!

[gunsgirl]

a lot will depend on how you get financed- FHA will require a min of 3.5%
conventional will require 10-20% down.
at 203 you will need 7100 dollars down.
and will depend on if you are wanting 100% financing or wanting to do a 90-10, 80-20
with a 90-10 80-20 you will get two different loans that will equal 100% financing.

if you are going VA - VA will not allow loan amounts in excess of the sales price + funding fee.

many banks are not willing to loan money in excess of the sales amount-
you really need to talk to your bank or mortgage person.

[jlbecker]

Originally Posted by gunsgirl a lot will depend on how you get financed- FHA will require a min of 3.5% conventional will require 10-20% down. at 203 you will need 7100 dollars down. and will depend on if you are wanting 100% financing or wanting to do a 90-10, 80-20 with a 90-10 80-20 you will get two different loans that will equal 100% financing. if you are going VA - VA will not allow loan amounts in excess of the sales price + funding fee. many banks are not willing to loan money in excess of the sales amount- you really need to talk to your bank or mortgage person.

you could get a home equity loan to cover the extra 10% down so that you have the 20%. you CAN do 10% or less down, but they will require an extra fee (basically loan insurance).
i have not heard of banks loaning the mortgage and personal loan into one lump sum. i think you might have to get the approvall for the mortgage, then get a home equity loan for your fix-up expenses.

[LoveMyHalos]

Use a mortgage calculator to see what sort of payments you will qualify for. Banks really want something like a 32/37 (front end/back end) ratio, which means your house payment shouldn't be more than 32% of your income and your total payments (credit cards, car, etc, PLUS house payment) shouldn't be more than 37% of your income. And a lot of times, it's a lower ratio than that (28/33 or 30/35... the banks all have their own ratio and you won't know what it is unless you specifically ask).

DH and I just bought a condo for $215,000 and our total payment is $1556, including taxes. Can you afford that sort of payment? What you can afford monthly should be first and foremost in your mind.

If you use VA, you don't need a down payment. If you use FHA, it's 3.5%, like someone else said. If you go regular loan, they will charge you PMI, unless you do a second for 20%, and those have high interest rates and I've heard that 100% financing is hard these days. FHA may be your best best if you can't do VA.

[Tiffy]

Thank you all so much for the helpful information. I do plan on getting an FHA loan. I dont want my monthly payment to be over 1200/month. The mortgage guy I spoke with said he would approve me for 190,000 which is way more than I want to spend.

[gunsgirl]

Originally Posted by Miss ♥ Thank you all so much for the helpful information. I do plan on getting an FHA loan. I dont want my monthly payment to be over 1200/month. The mortgage guy I spoke with said he would approve me for 190,000 which is way more than I want to spend.

they give to the loan amount based on your income and credit-

when we were house hunting we were aprroved for 233,000 well about the 190 range that was within our BAH rate.

our house is 189,000 and with all the added costs we pay 1435 a month.

a home I closed last month- 118,500 and thier payment at 5.50 is 840.00 a month.

[mossey2000]

Wells Fargo told us we would not need a down payment if we had a lot of equity which we do if we got the 203k loan.

[gunsgirl]

Originally Posted by mossey2000 Wells Fargo told us we would not need a down payment if we had a lot of equity which we do if we got the 203k loan.

how this works- is say your house appraises for 250,000 but the sales price is 200,000- you will then take a home equity loan = up to the 50,000 to apply to the down payment-

but you will still have 2 loans to pay off- before doing this make sure your interest rate on the home equity loan is not high- ( average 6-8%)

[mossey2000]

203k is not an equity loan in that sense. It's a mortgage with one payment. The purpose of this loan is to make improvements to modernize a house. We just already have equity as is but not enough to do a 100k addition.

[gunsgirl]

my mistake- I thought you were saying 203 thousand dollars --
it is the 203k mortgage;
http://nhl.gov/offices/hsg/sfh/203k/203kmenu.cfm