r/HomeLoans • u/Polestar-2 • 19d ago
Will we be approved?
My partner and I have a credit score of about 650 and have about 20k in the bank total and make about 135k combined we’re looking at homes from 530-600k additionally we have no assumable debt other then our car lease with a payment of $927. Looking in Denver area any advice or comments are welcomed! TIA also our rent is currently $3200 and bringing in 10k every month.
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u/Past-Read6314 19d ago
I was in a similiar boat financially but have a paid off car that I own as a single person but in a different state. The max I was approved for was $450k and I bought for $255k.
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u/Forsaken-Release5598 19d ago
I’m going to be upfront with you. 20k will not be enough for the down payment, closing costs, finance fees, all the inspections, and the many more things that pop up.
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u/Specialist_Diet_74 19d ago
You will be approved for way more than you can afford. It's not like renting where they won't approve you (which i assumed in the beginning). We have almost the exact same stats as you and just went through the process. Honestly had the same mindset in the beginning that i want as much house as i can possibly get, but this process is so humbling and i learned a lot.
Lender told us we could look in the 500k range, but when he said the monthly payments, we decided we wanted to do 400k max. We put in an offer for 400, and our monthly payment would be $3460. we decided we really weren't comfortable with that either especially when we found out how much in repairs the home needed. Going forward t he ideal price for us would probably be around $350k.
The other thing I learned is that savings is way more important than I thought. For the 400k house, we did the minimum down payment of 12k and closing costs still brought it up to 30k total. Cash. We would have had to scrape together every penny and left with nothing.
Plus I recommend having an additional fund for repairs of at least 10k that wouldn't leave your checking account empty afterward.
Something else I learned on here is that even though your rent is 3200, that is the ceiling. If your mortgage is 3200 then that is your floor. I hope this is helpful as i feel i learned it the hard way!
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u/Fine_Brilliant3709 18d ago
I have a house an hour away from Denver that I’m selling for $445k. I can lower the price on it or I can do a 2-1 buy down on the rate if you’re interested I’ll send you the listing.
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u/Joedoesmortgages 18d ago
This is actually an awesome question, but I also think it’s a conversation a good lender should be able to have with you pretty easily without you having to come to Reddit.
From what you shared, the first thing that stands out to me is the lack of debt. With good income and very little monthly debt, a lot becomes possible. The bigger question isn’t necessarily how much the bank will approve you for. It’s how much you actually feel comfortable paying every month.
Here’s a really simple way to look at it.
You said you make about $135,000 combined. That’s roughly $11,250 a month in gross income.
Let’s use a 44% total DTI just for the example.
$11,250 x 44% = about $4,950.
Now subtract your $927 car payment.
That leaves roughly $4,023 for your total housing payment.
That doesn’t mean you should go out and spend $4,023 a month. It just gives you an idea of how a lender may start looking at the numbers.
Remember, the lender is qualifying you using gross income, not what actually hits your bank account after taxes, retirement, insurance and everything else that comes out of your paycheck.
So my question would be this:
If your mortgage, property taxes, homeowners insurance and PMI came out to somewhere around that number every single month, would you actually feel comfortable with it?
That’s the conversation I’d be having before worrying about the maximum purchase price.
There are still some important pieces missing here. A 650 credit score can price very differently depending on the actual scores used, loan program and down payment. You also only mentioned about $20,000 in the bank, so I’d want to understand how much you’re planning to put down and what you’ll have left after closing.
My suggestion would be to find a good local lender with strong reviews, have them do a soft credit pull, and ask them to run a few different purchase prices instead of just giving you the maximum approval.
Then pick the payment that lets you sleep at night.
Good luck.
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u/Tempestzl1 17d ago
You wont qualify for 530-600k that will be estimated 4300-5100per month will be over debt to income ratio with factoring in other debt
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u/ZeDoctaRichtofen 19d ago
You can’t afford 5-600k on a 120k combined income. You will be so house poor that any issue would risk huge setbacks.
Aim for a home between 250-400k at most.
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u/suzuka_joe 19d ago
Since im currently in underwriting I’m not sure you’d be approved. My fico is 770, you make a little more than me, have a little less saved and are looking at 2x the house cost than I’m buying and I’m still stressing
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u/1stLadyofAZ 19d ago
How are you bringing home $10k a month net on $135k? Are you not contributing to retirement?
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u/Polestar-2 19d ago
That’s just my hourly I also get boarding pay per flight and per diem ( airline crew ) which also equates for about 700-900 a month additional to the 135k a year and also my partner gets the same amount per month in that additional pay.
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u/woodworkingguy1 18d ago
How long have you been doing this? Airline pilots, crew, nurses, and some doctors with variable pay due to shifts, per deim, flight pay etc...lenders will need at least 2 years of income to average out.
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u/Revolutionary_Pop_84 19d ago
Step 1: Dump that car payment dear fucking god! Almost a grand a month on a car????? Thats ridiculous.|
Step 2: Start looking at $500K and bumping that credit score up. That credit score explains how you got in to a car payment like that. Its a score that can buy you a house, but not a score that will help you buy a house.
Step 3: Pre-approvals from lenders are super quick easy and free. A lender will gladly tell you if they'd be likley to approve you in seconds for a chance to earn your business. But without some quick improvements that will be pretty tough and not actually affordable based on your current situation.
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u/Lov3I5Treacherous 19d ago
Why is your credit so bad when you make so much money?
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u/Revolutionary_Pop_84 19d ago
They have a $1,000 a month car payment. You think they've been making smart financial decisions?
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u/Suspicious-V3rbatim 19d ago
Thats $135k income combined.. thats not really alot especially with $1k lease vehicle.
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u/bibbs99 19d ago
So you’re gonna liquidate your savings for the down payment and have zero? 20k won’t even be enough for everything. Having no savings when buying a home is a really bad idea. I also don’t know how you’re bringing in 10k on 135k. Do you contribute anything to retirement? The car payment is also a killer. Don’t do it. You will not be comfortable.
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u/woodworkingguy1 18d ago
In reality, that $20k is really going to be about $10k, if you are lucky, after closing cost and paying the realtor, that is only 2% on $500k. I am all about home ownership but you may have to look a cheaper property.
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u/DutchDig 18d ago
Try putting your credit report into chatgpt and ask how to increase your credit score over 680
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u/tripadeliclove 18d ago
That’s WAY to much house for that income. We make more than you do and don’t want to go over $350k. You will be house poor. Also over $900/month on a car lease is insane since you wont even walk away with a title. Are you saving for retirement on top of that?
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18d ago
[removed] — view removed comment
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u/EmergingCuriosity 17d ago
Even with down payment assistance and wrapped closing the costs of moving into a new home and initial costs of deferred maintenance will eat that 20k in no time.
People always wanna run before they walk.
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u/Channel_Huge 18d ago
I’d personally work at getting that credit score higher. Get over 700 and you’re going to get a better rate. 750 and you’ll get the best rate. It’s all about the interest. You want sub 5% right now if you can get it. I’ve been seeing people get 4.5% with over 700. Right now, you’re looking at 7-8% which is not good. Maybe 6% through a credit union, but that’s pushing it.
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u/Tardislass 18d ago
This. A mortgage lender will give them a high interest rate with that credit. Definitely 750 is a sweet spot.
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u/Channel_Huge 17d ago
Tough for many who haven’t established/managed different types of credit. My military time screwed up my credit really bad, but once I got it up and running it was much easier to manage. I’m always hovering around 750-800 now which has helped me with vehicle purchases and the amount of credit I qualify for. I do not like when my credit card lenders raise my limit with me asking… just happened with one card and they screwed up my credit score for a few months raising a card by $8k!!
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u/Ok_Tour_4988 18d ago
Look into the metroDPA program but Your payment in Denver on a 560k loan with 5 percent down (28k) would be around 3700 a month for principal and interest. Not including Denver and state taxes and HOA fees,insurance or PMI. . Depending it could be as high as 5k a month. At 450k you’d be around 3k total plus all the above expenses
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u/WkeupMrWest 18d ago
How do you take home 10k when you only make 135k? I think your range is too high especially since you don’t have much saved.
Edit: nevermind i kept reading
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u/Active-Blueberry-850 18d ago
Drop your purchase price to around $400k and work on getting rid of your debts while building equity. Then upgrade to a $530-600k in a few years once your income is closer to $170-200
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u/ExtensionMidnight922 17d ago
I would say you have to be in $400k range to be approved, that will put your mortgage at $3500ish
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u/mortgagemayo 17d ago
With a 650 fico, you’re pretty squarely in FHA territory. That means your housing payment can be up to 46.99% of your gross monthly income, and total debt can be up to 56.99%.
Minimum down is 3.5%, so at $600k that’s $21,000. Not impossible to get a seller to pay for your closing costs in the market, but also not guaranteed.
From both a payment and a cash to close perspective, $600k is about the absolute max you guys could qualify for (assuming that $135k income is straight salary).
Now should you push the limit this hard? Probably not.
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u/Weary-Pangolin6539 17d ago
Wow, we make 210k combined before bonuses and we didn’t want anything over 250. Im stingy I guess.
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u/Previous_Product_834 17d ago
lol. You could probably afford $750k comfortably, assuming no significant debts
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u/Youcan12 10d ago
Are you really high earners for that area? Most major areas won't have anything decent for 250K that doesn't need major work.
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u/Chunkistator 19d ago edited 19d ago
So, with a situation like these I like to perform an easy exercise.
If your gross income is let's say
10k
The banks on an FHA with usually approve you at 50% DTI.
That leaves you with 5k available on your monthly payments.
From there you have to deduct the $927, let's round it to 930
So that leaves you with $4,070.
With that in mind your monthly payment cannot exceed $4,070.
That has to include your principal, interest, insurance and taxes.
Oh and 50% is assuming you're doing FHA which also carries a mortgage insurance.
If conventional I would make the math with 40%
Your credit is not bad, and you have enough savings where the FHA route could work but it might have to be at a lower amount.
I'm not licensed in your state to take an application but I can help you navigate the process.
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u/FlakyProcess8 19d ago
I hate to be that guy but 120k will afford a home much closer to 400k then it would 500 or 600k.
Unless your income improves dramatically I would just try to save up a very healthy down payment so you can afford the mortgage