How To Buy A Home With Low Income [Low Income Budget] - YouTube

hey y'all Jennifer Hernandez Loan With Jen. Today we  are talking about how to buy a home with  

low incomes so stay tuned we're  gonna go over the basic rules of  

qualifying so that you can be prepared  to buy your next home see in a minute

okay we're back so basic rules of how to buy a  home with low income so don't be deterred if you  

think that your income is too low there's so many  solutions out there that you might not know about  

so make sure that you talk to a lender I also  like and subscribe our channel we released two  

videos a week that really helped homeowners get  to the next level in their research on buying a  

home so the basic rules of how to buy a house with  low income are number one is how do we determine  

income so the way we do it is we take your gross  we do not take after-tax we give you the benefit  

of the doubt and we say okay your gross income  is $2,000 a month before taxes are taken out now  

when we're qualifying just a side note we look  at your pay stub and we do not count any bonus  

or overtime unless you have a two-year history so  that's super important so that's why it's good to  

get with a lender sooner than later but we use  the gross okay and we would just use your hourly  

base unless we can count some overtime bonus etc  we can prove that history okay now you need to  

have two years of employment but not necessarily  with the same employer in general so so when we're  

looking at employment we want to see that you've  been employed for two years changing jobs is okay  

if you've been in school you we can just show a  diploma or a transcript and you don't have to have  

the two-year history so there are some exceptions  to that rule okay we can also verify employment  

foreign country part of your to your history is  from a foreign country and we can verify that okay  

now the next rule to know is that your housing  payment generally there are some exceptions in  

most cases needs to be somewhere between forty  and forty three percent of your gross income so  

remember we already calculated how to calculate  the income then we take that number and you can  

pretty much estimate forty three percent is  probably a good guess now again I want to  

remind you there are exceptions we run everything  through this automated system that we're required  

to do as lenders all lenders have to do the same  automated system FHA has one system conventional  

loans have another system so the USDA loans have  yet another system that we have to run through  

and it's subject to the approval in that system so  things like credit reserves a debt to income ratio  

those things can all affect the income that will  allow or disallow to be used okay so I just want  

to make that side note now we went over that your  housing payment forty to forty three percent just  

in generic terms that would be the max monthly  payment that you could afford so let's say that  

that forty three percent number was a thousand  dollars okay so that forty three percent number  

and one thousand dollars means that your total  payment cannot exceed $1,000 now let's talk about  

what what goes in your payment your payment is a  combination of the principal and interest on the  

loan the property taxes a monthly number so you  take the annual property tax divide it by 12 and  

that's that's the property tax the homeowners  insurance using the same formula we take the  

yearly amount divided by 12 and that's what's  in your payment PMI if there is PMI on the loan  

you're likely putting less than 20% down so you  will have PMI on the loan and then any homeowners  

association dues that means the community there  there's a lot of communities all throughout the  

US that have an association fees so we would take  that annual amount divided by 12 and that would be  

a part of that $1,000 max payment in this example  okay so that's the thousand dollar payment that's  

what allows us to back into knowing what price  house you can likely afford okay now again there  

are exceptions sometimes we've had clients that  have really Rockstar credit and rockstar reserves  

lots of money in the bank and they we can get a  45 or 46 percent debt to income ratio so be sure  

to talk to your lender your local lender about you  know some some exceptions okay now the next thing  

we're going to talk about and hang in there I know  that this is a long video but this is how to buy  

a house with low income super important sources of  income so we went over how to calculate the income  

but what kind of sources so your job we have we  have to see it's got to be a paycheck cash does  

not count okay we can't prove cash so income from  your job counts if you're self-employed we just  

take two years average on your tax return of your  net income after expenses at the other thing is  

Social Security disability we can actually if  your Social Security disability is not taxable  

which some people don't have taxable numbers which  is good we can gross that up 15% so that's a trick  

that's a little secret that we use to get people  that add to have more qualifying income the other  

thing at child support so yes child support and  alimony you can use it has to then it received  

at least six months and it has to have at least a  three year continuance so if it's something where  

the children are older and they're about to turn  of age and it's only going to be received for you  

know another two years and ten months we can't  use it it has to be at least 36 more months of  

the child support alimony okay that's gonna be  received IRA in pension yes we can use that as  

well or we can set up have you set up a monthly  distribution through your IRA or pension if you're  

you know over I think the ages of fifty seven and  a half or whatever the ages that you can access  

that we can have you set up a monthly distribution  for that's for qualifying ok the last secret for  

income to qualify is if you meet certain income  requirements below a certain amount of the median  

income in your area that you're eligible for that  MCC credit it's a mortgage credit certificate that  

the federal government allows for first has to  be a first-time homebuyer and you have to make  

below a certain amount depends on the county  that you live in it's around in my County it's  

around sixty four thousand dollars so that $2,000  a year tax credit we get to divide that by twelve  

if you're eligible and it's a hundred and sixty  six dollars that we use towards your qualifying  

income let me tell you guys that has gotten some  of our clients to be able to buy twenty thousand  

dollars more house than they would have normally  not been able to buy puts them in a completely  

different neighborhood so it's really cool to  watch that happen so there's lots of creative ways  

that we can help you guys with qualifying income  to qualify for the house now the next thing we're  

gonna talk about and again hang in there we're  gonna go over a down payment and we're gonna  

go over closing costs on how to buy a home with  low income so don't be discouraged alright the  

next thing is down payment you can use your own  funds for down payment that we have to see that  

it's funds from your earnings you know or an asset  that you know let's say you sold a motorcycle or  

something we just have to track it and it has  to be all verifiable cash does not count so if  

you deposited cash we cannot count that but your  own funds for for downpayment we can verify that  

you can also get get funds from a family member  they must sign a gift letter we must verify the  

transfer and lastly you can also take loan from  a 401k either a withdrawal or alone you have to  

talk to the administrator whoever holds your  401k you just need to call them and ask them  

on how to access that money without penalty so  we have lots of clients that do that ok lastly  

we're gonna go over closing costs so hang in there  with me we are almost done closing costs you can  

get closing costs help in several different ways  your funds which we went over before your funds  

that are deposited from you know your earnings  at your job or you you know sell something like  

a car or motorcycle we can use those funds  as well sell our credit so depending on what  

kind of loan you're getting if you're getting a  conventional loan you can get a seller credit up  

to 3% of the price if you're an FHA loan you can  get a credit up to 6% of the price so if it's a  

hundred thousand dollar house you could get up  to a six thousand dollar credit but be careful  

the seller credit and/or you know credit from  you know whether it's the lender the seller the  

realtor any credits that are coming to you from  another party in the transaction cannot exceed  

that closing costs so if your closing costs are  six thousand and the credit would be seven you  

can't get that extra thousand towards your down  payment so that's really important to note okay  

so the next way to get money for closing costs I  mentioned it quickly it was the lender credit so  

you can get a seller credit you can get you  know seller homeowner Builder credit or the  

lender so the way we do that is let's say that  the rate was three and a half percent okay and  

you wanted some money to help you with closing  costs and some instances not all of them but in  

some instances we can raise the rate to let's  say four and we could give you a different  

Shoal it depends on your loan amount we give  you a percentage differential to help you pay  

for closing costs so it all depends on your loan  amount and it depends on what the rate is but talk  

to your local lender about that about if there's  any lender credit available for closing cost so  

over a 30-year period it does not make that much  of a difference in your payment I promise so have  

them help you do that calculation the other way  the final way that you can get your closing costs  

and we are almost done we're going to wrap this  up is downpayment assistance so every state has  

different downpayment assistance available so  check with your local lender again to make sure  

that they know you know national lenders may not  be familiar with downpayment assistance in every  

single state so if you're living in Texas a  national lender just may not be well-versed  

on that so make sure that you talk to the local  lender about that so downpayment assistance it  

can be a great way to pay for not only closing  costs but but down payment as well okay so we've  

gone over a ton I'm just gonna recap here on how  to buy a house with low income first we've got  

to determine your income and what it is and what  it isn't we've got to stick to the debt to income  

ratios what's the source of your income that  we can use for qualifying down payment how you  

can get assistance with down payment and then  closing costs how you can get assistance with  

closing costs as well so I hope this was helpful  please like and subscribe we released two videos  

a week to help homeowners to the next level to  help them on their purchase talk to you soon

legacy Mutual mortgage is an Equal Housing  Opportunity lender the opinions expressed  

here do not reflect those  of legacy Mutual mortgage