Solutions to qualify income for first-time homebuyers

Mortgage broker: Liz Bayer,

ProMortgage

Property type: Condo in Walnut Creek.

Appraised value: $700,000.

Loan amount: $560,000.

Loan type: 30-year fixed.

Rate: 5.99%

APR: 6.01%.

Backstory: As a result of a recent article that I wrote for the Just Approved column regarding the great conventional loan product that was rolled out recently for first-time homebuyers, I was approached by a newly married couple who were interested in qualifying for this loan program.

After reviewing their income, if I used all of the income combined, they would have exceeded the income cap to qualify for the program, since it was geared for homeowners with low to middle income for the area.

In this case, the maximum income allowed for Walnut Creek to qualify was $181,000 annually. My clients’ combined income exceeded this. Their combined income was $210,000 annually.

However, based on the price point that they wanted and their housing payment target, we did not need all of this income to qualify. If I removed the bonus income that the husband made, which was about $50,000, which we did not have to in

» “In this case, the maximum income allowed for Walnut Creek to qualify was $181,000 annually. My clients’ combined income exceeded this. Their combined income was $210,000 annually. However, based on the price point that they wanted and their housing payment target, we did not need all of this income to qualify. If I removed the bonus income that the husband made ... which we did not have to include per the lender guidelines, then I was able to qualify them for the special first-time homebuyer loan.” clude per the lender guidelines, then I was able to qualify them for the special first-time homebuyer loan.

Normally, rates are worse on condominiums if you put less than 25% down, but by going with the special loan, putting 20% down did not negatively impact my clients’ rate at all, which is one of the benefits of this loan product.

Another benefit of this program is that there is no negative impact to the rate on a lower credit score compared to the normal Conventional loan. The husband’s credit score was less favorable and, under normal circumstances, would have caused the rate to price higher. Had they not met the income requirement for this program, their rate would have been +0.875% higher given the down payment and condo property type and credit score.

So, my borrowers’ monthly payment was $324 per month lower and they qualified for a larger loan! Newly married and new home — a great start to 2023.