I’m in lending and have helped hundreds of families accomplish the American Dream of home ownership. I do everything I can to help regular folks beat the system by using every “cheat code” I know to help them pay the least amount in interest. I’ve been pretty successful at finding solutions for families needing a home, up until this year and here’s an example of why:
Im in Arizona, where the Average Home Price is 445,000. Even this price is impossible to find. My wife bought our home for 260k in 2018, and as of this morning, it’s worth over 600k for our 3br/2ba home less than 1800 sq ft.. We are not in some fancy subdivision either, this is a 50 year old home in a not so hot area of town.
This being said, Fannie Mae offers a program where you only need 3% for the down payment to purchase a home. To qualify for this program, you need to have a credit score above 620 and make no more than $63,200/year in income. This comes out 5,266/month in income.
This being said, if you have absolutely ZERO debt, the maximum your total monthly payment can be is 2,580.67 a month based on income qualification guidelines for Fannie Mae. I work with 50 of the top lenders in the entire country. As of this morning, the average rate for someone with this criteria is a rate of 4.75% if their FICO score is 720. Let’s say you found a needle in the haystack and found a home for the “median” price of 445k in Phoenix: the Principle and Interest Monthly payment for a home purchase of 445k with 3% down would be $2,565. To make things worst, that is not the total payment. Assuming you found a unicorn property with 80/month in taxes and 50/month in property insurance, your Principle Interest, Taxes and Insurance (PITI) for a home would be at a MINIMUM $2,695/month, which would disqualify you from the income guidelines. Heaven forbid if your property taxes aren’t dirt cheap or if you have an HOA. All of this imaginary scenario is gravely assuming there are no investors looking to buy that home and no other buyers willing to increase their offer above it. Which in this market, is not happening.
So yes, it’s literally impossible to qualify for a home right now if you’re poor or don’t have at least 50,000 dollars at your disposal right now.
I truly believe this is the end of the housing boom. We are at the peak of the homebuyers rush. What happens next is probably one of two scenarios:
- Homes will continue to be purchased by the hedge funds who have been sitting on oceans of cash and it will force anyone who is not a homeowner to rent for at least another decade.
- The hedge funds will unload their portfolios of real estate homes they own causing the mother of all housing crashes, worst than the 2008 crisis.
Neither of these scenarios are pretty, but they are both the only solutions without updated legislation to stop the purchase of homes from corporations for investment.