You may need to secure a HUD loan or Fannie Mae loan. If your property is in Bed Stuy it is still considered an area where they will finance more than in other areas of Brooklyn. These type of loans require you to pay a MIP (I think that is what it is called) but you get most of it back after one year. You can also apply for a construction/rehab loan (if the property is eligible) at the same time as your mortgage. Its hard to qualify for the 3% down, but the 5% down is more realistic. When we purchased our home we did 3% down in Prospect Heights. These type of mortgages also allow you to use a % of the income you will receive from tenants as part of your overall income when applying. It is a lot of paperwork. Good luck
Buy an apartment that is not overpriced. When that appreciates (it will eventually), sell it, and you’ll have a much bigger downpayment. And perhaps you’ll have paid off your student loans by then, and be earning more. That’s what others do.
Even if you can get a mortgage, its not a smart move to buy a home without money in the bank. Having a house is not like renting. You can’t call the landlord when the roof leaks, boiler breaks, water main bursts. Even if the place is totally renovated, things still happen and you will need to lay out some cash.
Save for a proper downpayment plus an emergency cushion and then buy. You’re not ready yet.
Yes, its hard to save money. That doesn’t mean its not possible.
Here’s why this doesn’t work at all. You talk about how hard it is to save. You’ve only managed to save $20,000 so far. But you are talking about taking on a $4,000 plus mortgage each month, in addition to insurance, taxes, heat, and all kinds of additional maintenance costs that come with a 3-family. By the time you are done, you are going to have very high monthly costs, even if some are defrayed by rental income (and don’t get me started on having tenants who don’t pay, empty apartments, etc.)
If you think you can handle this on your salaries, you should be renting a place for $2,000 (and there are definitely places to be had for that). So over a single year, you should have an additional $24,000 at least saved. So that fact that you’ve only saved $20,000 so far but think you can handle the cost of a 3-family means you haven’t done a good job saving or you really don’t make enough to cover these costs except perhaps if every single thing breaks right for you, which never happens (there is always some unexpected cost associated with home ownership).
I think that’s why people are responding this way. Buying a house is a great idea, but you should buy with a cushion of cash, not with the hope that you’ll have high rents every month and nothing will ever break.
You should probably talk to a bank or broker. Things have changed a lot in the past 4 months. Before thanksgiving, banks were saying “only 10% down for a 3-family. No problem, if you have good credit.” Not anymore. Most recently I was told that 10% down might still be possible on a single family or 2-family, but anything more is seen as more of an investment property and thus more risky. So they want 20% down.
And if you can get a loan at 90% or more, expect to pay much higher rates on that second loan. One place was quoting prime +3%. I wouldn’t expect a reputable lender to lend with 3% down right now. Not with housing values dropping in many places. If housing prices fall 10 – 15% and payments can’t be made by the owner, the bank’s left holding a mortgage that isn’t even covered by the value of the home.
Actually, 12:44, since they only have 3% of 700k, there budget is whatever they can get with a 20k downpayment. If some bank will allow them to buy with only 10% down, they can squeeze themselves into a crappy studio in a crappy neighborhood with that.
Look forward all you want, but expect the banks to do the same. How can they realistically look forward to these people paying off a 700k loan when they can’t save more than 20k?
There are programs where you can buy a 3 family house with 3% down.
Contact Brian Scott Cohen at 718 780 9132 or 646 584 8009 and he will go over all the programs and explain all your options. He just did our loan…..
You may need to secure a HUD loan or Fannie Mae loan. If your property is in Bed Stuy it is still considered an area where they will finance more than in other areas of Brooklyn. These type of loans require you to pay a MIP (I think that is what it is called) but you get most of it back after one year. You can also apply for a construction/rehab loan (if the property is eligible) at the same time as your mortgage. Its hard to qualify for the 3% down, but the 5% down is more realistic. When we purchased our home we did 3% down in Prospect Heights. These type of mortgages also allow you to use a % of the income you will receive from tenants as part of your overall income when applying. It is a lot of paperwork. Good luck
Buy an apartment that is not overpriced. When that appreciates (it will eventually), sell it, and you’ll have a much bigger downpayment. And perhaps you’ll have paid off your student loans by then, and be earning more. That’s what others do.
Even if you can get a mortgage, its not a smart move to buy a home without money in the bank. Having a house is not like renting. You can’t call the landlord when the roof leaks, boiler breaks, water main bursts. Even if the place is totally renovated, things still happen and you will need to lay out some cash.
Save for a proper downpayment plus an emergency cushion and then buy. You’re not ready yet.
Yes, its hard to save money. That doesn’t mean its not possible.
and to add to my post at 9:42 am, forgot to say that if you only put 3% down, you have to pay mortgage insurance, another extra expense.
Here’s why this doesn’t work at all. You talk about how hard it is to save. You’ve only managed to save $20,000 so far. But you are talking about taking on a $4,000 plus mortgage each month, in addition to insurance, taxes, heat, and all kinds of additional maintenance costs that come with a 3-family. By the time you are done, you are going to have very high monthly costs, even if some are defrayed by rental income (and don’t get me started on having tenants who don’t pay, empty apartments, etc.)
If you think you can handle this on your salaries, you should be renting a place for $2,000 (and there are definitely places to be had for that). So over a single year, you should have an additional $24,000 at least saved. So that fact that you’ve only saved $20,000 so far but think you can handle the cost of a 3-family means you haven’t done a good job saving or you really don’t make enough to cover these costs except perhaps if every single thing breaks right for you, which never happens (there is always some unexpected cost associated with home ownership).
I think that’s why people are responding this way. Buying a house is a great idea, but you should buy with a cushion of cash, not with the hope that you’ll have high rents every month and nothing will ever break.
You should probably talk to a bank or broker. Things have changed a lot in the past 4 months. Before thanksgiving, banks were saying “only 10% down for a 3-family. No problem, if you have good credit.” Not anymore. Most recently I was told that 10% down might still be possible on a single family or 2-family, but anything more is seen as more of an investment property and thus more risky. So they want 20% down.
And if you can get a loan at 90% or more, expect to pay much higher rates on that second loan. One place was quoting prime +3%. I wouldn’t expect a reputable lender to lend with 3% down right now. Not with housing values dropping in many places. If housing prices fall 10 – 15% and payments can’t be made by the owner, the bank’s left holding a mortgage that isn’t even covered by the value of the home.
If I were you, I’d just try it. If you know you can make the mortgage payments, just apply and see what happens.
Actually, 12:44, since they only have 3% of 700k, there budget is whatever they can get with a 20k downpayment. If some bank will allow them to buy with only 10% down, they can squeeze themselves into a crappy studio in a crappy neighborhood with that.
Look forward all you want, but expect the banks to do the same. How can they realistically look forward to these people paying off a 700k loan when they can’t save more than 20k?