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Disadvantage to lake front property

I was expecting to get qualified for more! I have 625 FICO and worked for 10 years. I make 55k/year plus I've own a business for 22 years (a lake front quick mart in The Diamond Lakes) that brings in about 80k/year. I am looking to upgrade and purchase a lakefront home in Hot Springs for $315k, but was only approved for $208k. My first home I was approved for $380k. I was late 60 days in 2009, after the market crash, but fine since. Do you think this is why my second time approval for a home was less? I was also told that homes on a lake (or ocean front property) is harder to qualify for more money. Is this true too? I appreciate the insight. My lender is not too patient and helpful with my questions. by richard921 from Hot Springs Village, Arkansas. 7 days ago Reply

William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,455 contributions

More info needed.. but No.. lake front homes are not harder to qualify for, and your late mortgage payments form 9 years ago has nothing to do with your credit today.. in fact, it probably doesn't even show on your report. First, without knowing what your debt load is it's hard to determine your debt to income ratios.. assuming your $80K per year is gross pay and add your $55K a year job, you make $135K a year, or $11,250 per month.. But we need to know about your debt... most lending guidelines require your debt to income ratios to be at or below 43% to 45%, with some going as high as 56%. FHA has the higher allowable DTI, but most lenders have added guidelines that only allow the higher ratios if your score is 640 or above.. so, realistically, because of your low credit score, you're probably capped at 43% DTI or about $4838 for all your debt payments including your new housing payment. Now lets talk about the lake side market.. If you're like most business owners, you write off everything you can.. Your business can make a $1,000,000 a month, but if you write off $99,999,000, then for qualifying reason, you only make $1000 per month.. My guess is that your $80K income is not gross income.. Because it's self employed income, the lender has to take a 2 year average.. but only if your year over year income is increasing.. if it's decreasing, then they take the lower of the 2 years.. So, without looking at your complete loan profile, it's hard to determine why you are being capped at $208K.. Realistically, call your loan officer and ask him to explain.. income calculations can be difficult to do sometimes, but the guidelines are pretty clear.. and most seasoned loan officers have a grasp on DTI restrictions, and can tell you right off why.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

3 days ago
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,791 contributions

The fact it is a lake property has zero bearing. What stands out is your income. For self employed, we will look at your last two years federal tax returns. See what you bring in the front door ($80k), subtract out expenses, etc.,then basically whatever you end up telling the IRS you made ($55k) is your loan qualifying income. From there, it is way more complicated than this example, but the quick down and dirty answer is most people can qualify for about 4 times their income if they don't have too much debt. So 4 X 55 = $220,000 loan. Therefore them telling you $208,000 sounds about right to me. No one can get you a great answer without a full and complete application, but I hope this helps. For loans in MN, SD, or WI, contact me at or (651) 552-3681. NMLS 274132.

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