Feb
28
Buying condo, paying mortgage with student loans? Qualifying with no income?
Filed Under Renting & Real Estate
aletheapontifex asked:
I’ll be starting at a top ten law school in the fall, and I am thinking about buying a condo instead of renting. I have excellent credit (750s), as well as enough for a 20% down payment. I have a car worth $12,000, paid off, and no other assets. I have no credit card debt, and my student loans are almost all deferred. My only real liability at this point is a $50/month loan payment. I am looking at two-bedroom units, updated, for between $115-125k. The market where I am going to school is well-insulated, a relatively affluent college town and property values have generally appreciated very well but right now things are hitting bottom (or they seem to be). The places I am looking at sold for close to $200k two years ago. I’d like to purchase one of these units and rent the second bedroom to another law student. My student loan income and money from summer employment allows me to comfortably pay the mortgage without a roommate, but with a roommate I cut costs by more than half. My plan is to live there for three years, rent it out for another 2-3 and sell it before reaching the capital gains tax cutoff (2 years residence in the 5 years prior to sale). Mortgage payment would be around $600/month, plus fees and taxes, so closer to $800/month–I’d be paying $750 to rent a shabby one-bedroom. I’ll also save $10k because I’ll qualify for residency status in the state I am moving to and in-state tuition rates. Overall I think I’ll come out well ahead of renting, my only problem is qualifying for a loan. I have been working very sporadically for the same company for the past two years part time (just a few hours here and there, might have gone inactive part of that time) and have little verifiable income. My down payment comes from savings from a good job I had a few years ago, before I went back to finish my undergraduate degree (been in school full time since 2006, worked full time before that). Parents are no help, worse off than I am financially. Banks don’t count student loans as income as far as I know. My summer employment options are solid, coming from the school I’ll be attending, but this is unverifiable as of yet. As is the rental income I’ll make from the second bedroom. Even without summer employment, my loan amounts comfortably cover the mortgage payments. I thought about a SISA loan, but I can’t lie about anything, and I hear NINA loans have gone the way of the dinosaur. Any suggestions?
It is long, but I figured it would be worth putting all the info in so I didn’t have to answer questions about it later! I’m a first time buyer, so please help, thanks!
Renting a bedroom is not illegal nor is it an “illegal occupancy.”
TROY
I’ll be starting at a top ten law school in the fall, and I am thinking about buying a condo instead of renting. I have excellent credit (750s), as well as enough for a 20% down payment. I have a car worth $12,000, paid off, and no other assets. I have no credit card debt, and my student loans are almost all deferred. My only real liability at this point is a $50/month loan payment. I am looking at two-bedroom units, updated, for between $115-125k. The market where I am going to school is well-insulated, a relatively affluent college town and property values have generally appreciated very well but right now things are hitting bottom (or they seem to be). The places I am looking at sold for close to $200k two years ago. I’d like to purchase one of these units and rent the second bedroom to another law student. My student loan income and money from summer employment allows me to comfortably pay the mortgage without a roommate, but with a roommate I cut costs by more than half. My plan is to live there for three years, rent it out for another 2-3 and sell it before reaching the capital gains tax cutoff (2 years residence in the 5 years prior to sale). Mortgage payment would be around $600/month, plus fees and taxes, so closer to $800/month–I’d be paying $750 to rent a shabby one-bedroom. I’ll also save $10k because I’ll qualify for residency status in the state I am moving to and in-state tuition rates. Overall I think I’ll come out well ahead of renting, my only problem is qualifying for a loan. I have been working very sporadically for the same company for the past two years part time (just a few hours here and there, might have gone inactive part of that time) and have little verifiable income. My down payment comes from savings from a good job I had a few years ago, before I went back to finish my undergraduate degree (been in school full time since 2006, worked full time before that). Parents are no help, worse off than I am financially. Banks don’t count student loans as income as far as I know. My summer employment options are solid, coming from the school I’ll be attending, but this is unverifiable as of yet. As is the rental income I’ll make from the second bedroom. Even without summer employment, my loan amounts comfortably cover the mortgage payments. I thought about a SISA loan, but I can’t lie about anything, and I hear NINA loans have gone the way of the dinosaur. Any suggestions?
It is long, but I figured it would be worth putting all the info in so I didn’t have to answer questions about it later! I’m a first time buyer, so please help, thanks!
Renting a bedroom is not illegal nor is it an “illegal occupancy.”
TROY
Comments
4 Responses to “Buying condo, paying mortgage with student loans? Qualifying with no income?”
Leave a Reply
RENE
With the credit situation being what it is you will be hard pressed to obtain a mortgage loan with no two-year history of steady employment in the same line of work. You will also not be able to claim any rental from a second bedroom as this would be an illegal occupancy and would not count towards your income. You need at least two years uninterrupted work history in the same field in order to qualify for a loan. As it is you do not have it, therefore no mortgage. You will need to rent for at least two more years.
TOMAS
You have a serious problem qualifying for a loan without verifiable income these days. Your student loan money is not income! It is borrowed. Rental income will be seriously discounted in the income equation & is not enough to help you qualify for the mortgage.
Yes, it can make more sense economically to purchase a 2 BR condo and rent out one BR to a fellow student. But you must have a job and income to qualify for a loan. Can you work more for the company you have been working for over the past couple years? If you did that, then talked to the bank, perhaps with good credit & big down payment you could swing the deal.
COLE
don’t buy a condo buy something with a little character for god’s sake…not something stamped out with a cookie cutter
ELOY
You will not get a loan under those circumstances. Nor should you.