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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Re: When can I qualify for a loan? Date: 4/23/2013 1:57 AM
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<i- I plan to graduate grad school with a PhD in August or so, and begin a new job soon after

- The job I'm taking is located in the same location as my university, and the company has strong ties to my research group

Since you are staying in the same line of work, you should be able to qualify almost immediately, based on your new salary.

- I am single with no dependents and no debt besides a couple credit cards I pay off in full; to the best of my knowledge, my credit score dances around 760

Congrats on what you've been able to achieve!

- I estimate I can have about $25K available for a down payment by the end of the year.

Don't forget about closing costs. You may be able to get the seller to pay $3k - $5k, but if not, some of the 'down payment' money will need to be set aside for closing costs. Plus you will want to have some money for furnishings, repairs, upgrades, fixes, etc. And I would strongly suggest that you have at least a start on an emergency fund, since you never know what things might break or be damaged when you least expect it. Spending all of your savings on acquiring the house can leave you short of liquidity at just the wrong time.

- I would probably be looking at houses that are in a $130-170K range. [Using "how much house can you afford" calculators, too expensive to afford based on my grad student income, but cheap enough to afford even if I used my partial-grad-student/partial-real-job income for 2013]

If you want to go that high, it would be acceptable to use your new job annual salary, as long as you can get an offer letter stating what your salary is, and have a paycheck or two to show that you are being compensated at that level.

However, the less money you commit to paying in mortgage payments, insurance and property taxes, the more you will have to max out your retirement plans, plus save for other pesky things like a car, or maybe getting married and/or having kids, or any other life events you can think of. Since your PhD presumably took a few years beyond undergrad, you are starting out a few years behind where you could have been in saving toward your goals if you'd had a 'real' job. So if you can be happy with a lower price range house, you can use the difference to help make up for some of those lost earning years.

I'm guessing that banks wouldn't be satisfied me coming to them in October or November and would want me employed longer, but when could I reasonably expect one to play ball? Could I qualify early next year, after doing 2013 taxes?

I would say that the banks are likely be satisfied as soon as you feel comfortable that you have enough money saved to cover the down payment, closing costs and any repairs/fixes/upgrades/furnishing that you may want to do, plus have some additional set aside for emergencies.

If you don't want to wait until then to get out of an apartment, you may want to rent a house instead.

AJ
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