0 votes
I've read about Home Ready loans, and low down payments. I need to know if there is an opportunity for me to qualify. Here are my particulars.
I would like to purchase a multifamily home/apartment building in Venice, Santa Monica, Mar Vista or Marina Del Rey. I would like to live in one of the units and rent out the rest. I won't be able to find something in these areas under 1 mil.  
 Summary of where I stand:
•    I work full time. My salary is $180k per year
•    I collect retirement from my previous job- $61,200 per year
•    I own a townhouse in a nearby city.
o    Worth—approximately $450,000 +
o    Current mortgage owed approx. $280,000k
o    My son and his girlfriend currently live in the condo.
o    Current Credit score: 659
My debts:
    Car:                $40,667.38        monthly $598.00
    Student Loan             $269,653        monthly $900. 48
    Debt Consolidation loan        $33,000        monthly $1,061.00
    Rent $2,500/month – I rent a place near my current job
asked Jan 31, 2019 in General Financing by MJ

1 Answer

0 votes
Hello MJ, and thank you for writing. The one item I don't see in what you supplied is fairly important -- the mortgage payment (principal, interest, insurance, property tax, HOA dues) -- and whatever rent you're getting for the condo. That really affects your debt-to-income ratio.

Regarding the rental income for the subject property (the one you want to buy), there are two ways to treat it. Normally, lenders give you credit for 75 percent of rental income supplied on existing leases or calculated by a licensed appraiser. Then, they either apply it dollar for dollar to the mortgage payment (which is far more favorable to the borrower) or add it to your qualifying income but hit you with the whole mortgage payment.

FHA, which allows you to finance up to 96.5 percent, sets its loan limits in LA County at $930,300 for a duplex,  $1,124,475     for a tri-plex and $1,397,400 for a four-plex.

You can estimate what you'd qualify to buy with our Affordability Calculator. Input your income and debts, including the mortgage on the condo and any rent you receive from it. Take 75 percent of the rental income from the subject property, add it to your monthly income, add the PITI of the subject property to your debts, and see how much you can comfortably pay.

answered Jan 31, 2019 by GinaPogol (47,650 points)

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