Guidelines for Buying a House with Loan: Tips You Should Know (1)

October. 19,2020
Guidelines for Buying a House with Loan: Tips You Should Know (1)

I have met many lenders. Many people think that when buying a house, the house must be owner-occupied. In fact, it is not. Now I am renting a house. If you have the funds and good housing, you can also directly apply for a house purchase loan. And buying a house with a loan is far less difficult than you think.


There are three types of "housing" for a house loan application:

Primary Home: Literally, it is bought to live by oneself


Second Home: refers to a house that does not live long, but occasionally lives in it, such as near a tourist attraction, a house by the sea, etc.;


Investment Property: It is expected to be acquired by buying, or buying low and selling high. In many places, due to geography, work location or environmental factors, home buyers may think that it is more suitable for self-occupation. For example, it is also a single house with 4 bedrooms and 3 bathrooms. It may cost more than 1 million to buy on the coast, but it may be available for 300 or 400,000 inland, and it may cost a few hundred dollars. In other words, housing prices and rents do not increase in a linear correlation. This is why some places put 20% of the money to get cash, and some places put 40% of the money and cannot collect the mortgage and land tax. Here are a few questions that are often asked when buying US real estate with a loan.


How much income is required for buying a house? Is there any difference with primary home review?

There is no difference. The review of housing income still depends on DTI (Debt-to-Income Ratio), which is: housing loan + land tax + insurance + HOA + car loan + credit card repayment amount ≤ 45% of monthly income before tax


Even better, if you buy a house, the possible income of the house will be included in the usable income. The algorithm is to multiply by 75%, and then subtract the monthly payment of the house. If the rest is positive, add it to the denominator; If it is negative, add it to the numerator. Therefore, sometimes you will find that you can even get a higher loan for buying a house directly.


How is this decided? All loans must be appraisal, and banks will refer to the recommendations given by Appraiser on the Appraisal Report. Appraiser will compare the approximate prices of nearby houses, make a "Comparable Rent Schedule" and give its own recommended rental quota.


How much is needed and are there any additional requirements?

Buying a house requires 20%, but in addition to the Closing Cost, the loan application for the house also needs to have reserves (Reserves), and the amount required is 6 months of PITIA.