Buying a House with Your Living Stipend?

[Inspekt]

So If you have 4 years of guaranteed funding in writing, is it possible to purchase a house with your stipend as your main means of income? I'm guessing you'd still need a significant downpayment.

Has anyone tried this or know if it is possible?

I figure if I am going to be at a program for 4-5 years and with the housing market and interests rates lower it may be a decent option to consider. Thoughts?

I have never owned a home and I'm not really familiar with the process.

[timuralp]

I got a condo for $75k with a $54k mortgage. So it's possible

Do you have specific questions?

[Rutabaga]

I know there are some other posts about this that might helpful if you do a search. One about housing and one about condos I think. I know cause I started the condo one. Still no closer to figuring out if I can make this work though!

[Inspekt]

Search has been down for me for some reason, I'm not sure why. Could you post a link to those threads?

It is good to hear it is possible. I wasn't sure if the bank would consider that stipend as a reliable form of income to get approved for a house/condo. Sure seems like a better idea than renting if you can get a decent price.

As for questions, what do you know now that you wish you knew before buying your place? Do you have any tips or was there anything that was unexpected? Did you buy in your first year, or did you rent first and then buy?

Any other advice you think would be useful is appreciated!

My thoughts are to work as an RA my first year and use the 10 -15 k I save on room and board (plus some of my own savings) as the downpayment. Just wanted to make sure my plan was a feasible option.

Thanks.

[timuralp]

As for questions, what do you know now that you wish you knew before buying your place? Do you have any tips or was there anything that was unexpected? Did you buy in your first year, or did you rent first and then buy?

So, here's what I did: I got an internship over the summer before starting grad school and saved around 8-10k. Then I asked my parents to help me. The down payment was $21k + closing cost. The total ended up around $25k. Then, since I was working, I asked my mom to help me out by flying out to look at condos. This was great of her and I'd say if you can't pay someone to do this for you or if you can't visit, it may be worthwhile waiting like you're planning. In the end, it worked out great for me, as we managed to snatch a condo that was on the market a total of 2 weeks before we contacted the sellers. I'd say I got a bit lucky and I didn't run into any surprises along the way. Everything was pretty clear and straightforward.

Getting a feel for the area is just a great idea in general, so be sure to do that. If you go to school somewhere for a year, you'll definitely do that, so that's a good idea. Otherwise try to find people to talk to who live there already. Then with your mortgage concern, typically a bank will take your stipend and divide it by 12 (I know it's 9 months, but you have no guaranteed funding for the other 3). Then that's your monthly earnings. Then they'll compute the tax you're paying. Then they subtract any outstanding payments you might have, such as car, credit card, etc. Then from that number they compute the monthly payments and they typically want to see a figure that is at most a third of your income. So, in my case it was 1500/3 = 500 maximum they'd let me get away with. From that you can figure out the mortgage you can get. Finally, if you realize that you need more in mortgage and you know you can afford it, you could ask your parents to co-sign it. My parents didn't want to do that since then their taxes would be quite a bit higher, so we just looked at cheaper condos. Hope this helps

[liszt85]

Can international students on F1 visas buy a place too? I'm really curious. Say there is this place that costs 75K, how would I go about making the payments? I don't exactly understand this business of downpayments, mortgage, etc. BAck at our place, you pay the 75K and get the place. Could someone please explain the process to me?

[Inspekt]

Wow that was awesome. Thank you so much for the detailed info it is very helpful!

[RF237]

Can international students on F1 visas buy a place too? I'm really curious. Say there is this place that costs 75K, how would I go about making the payments? I don't exactly understand this business of downpayments, mortgage, etc. BAck at our place, you pay the 75K and get the place. Could someone please explain the process to me?

Most people here don't have the savings to buy a house outright. So to buy a house or condo, they take out a loan with a bank, called a mortgage. Almost all mortgages require you to make a down payment, though the amount is often negotiable. The down payment is what you pay up front, when you sign the contract. So, if you're buying a house that costs $75,000 and make a $10,000 down payment, then you take out a mortgage for the remaining $65,000. Since it's a loan, you have to pay interest, so you want to make sure you llok around for a good interest rate and, as the current housing crisis shows, get a fixed rate, not variable rate mortgage ( i.e., your interest rate doesn't change over the life of the loan). Mortgages are usually for a term of 30 years, although, again, that can vary. You usually have to be preapproved for mortgages, which means that when you're looking at houses you go to a lender, give them all of your financial info, including your credit score, and they determine how much they're willing to lend you and at what terms. On a graduate student stipend, a bank isn't going to lend you much money, especially since they're so careful with credit right now.

As for being able to buy a house on a visa, sorry, no clue.

[liszt85]

Thank you, rebeccafav!

[ShaneQ]

ok anyone know where to find the law/rule/regulation that allows for people to report stipends as a source of income towards their mortgage?

I was taking a real estate class and it was near impossible just to get the agent teaching me to answer that it was even possible what I remember is if you can prove u have more than 2 years coming in then you qualify.

I am asking because I have the GI bill which just recently changed to allow for a 1k per month stipend. I will have about 28 months left.

[SocViv]

ok anyone know where to find the law/rule/regulation that allows for people to report stipends as a source of income towards their mortgage?

I was taking a real estate class and it was near impossible just to get the agent teaching me to answer that it was even possible what I remember is if you can prove u have more than 2 years coming in then you qualify.

I don't know about the law/rule, but at the bank we used for our mortgage, they took my acceptance letter (which detailed the minimum funding I'd get for the next 5 years) as proof of income. It might be because I'm in a midwestern college town and the banker was familiar with that kind of situation. When I tried to get quotes from mortgage brokers (like lendingtree.com), they had no idea what to do about it.

[jasper.milvain]

When we went in for our mortgage, they took my funding letter as proof of income, no questions asked. I have a husband with steady employment and a good downpayment, though. We were very surprised when they asked for further confirmation of my husband's job (4 years and counting with a multinational company) but didn't ask for any further assurance about my university income. I think that banks generally see higher ed as more stable than it actually is.

[ogopogo]

Interestingly, the two banks and one mortgage broker I asked about this said that scholarship income (guaranteed for 3 years) wouldn't count and they would only consider my partner's income, even though he is self-employed. I also asked about the 5 year funding guaranteed by my department, in case that would help, but they weren't interested in that either.

[jasper.milvain]

That's bizarre, considering we're both in Canada. I may as well be explicit: TD accepted my funding as proof of income. Did you end up getting approved anyway, ogopogo?

[ogopogo]

That's bizarre, considering we're both in Canada. I may as well be explicit: TD accepted my funding as proof of income. Did you end up getting approved anyway, ogopogo?

We did get approved in the end and were able to buy the house we wanted, which is good, but it still seemed ridiculous that they wouldn't count guaranteed money coming in as income, and in any other market that would have made things quite difficult for us. Even more bizarre is that I also dealt with TD :? I wonder if there's a sensible explanation, or if there's just a certain amount of variation in the answers you get? Did you talk to TD in Vancouver?

[jasper.milvain]

That's really weird! We dealt with TD in Edmonton, as well as a TD-affiliated mobile mortgage broker. I wonder if they took my offer letter and just ignored it... but no, when the woman was punching in numbers to make sure the debt ratios worked, she definitely included my income. I was also baffled by the difference in the documents asked for by the TD person we talked to a few months ago by just walking into the bank, and the mortgage broker we ended up working with. The first one needed confirmation that my husband's transfer was going through, so we put off house hunting for over a month waiting for that to get formalized, and then the second person didn't ask for that confirmation at all. Guess this might be a more idiosyncratic process than I thought. *shrug*

Congrats on getting the house!

[kate120]

I know there are some other posts about this that might helpful if you do a search. One about housing and one about condos I think. I know cause I started the condo one. Still no closer to figuring out if I can make this work though

[daddys_girl]

I bought a house with the living stipend.. I worked for 2 yrs before I came out to grad school though so I could put a good downpayment down on the house and have a cushion to pay for everything over the next 4-6 yrs.. it is possible even with the tough economy.