We had a similar situation and just bought with cash. The smaller the loan the more expensive (as a percentage) and inefficient the loan closing costs become. We spent about $700 on closing costs with that purchase and a pretty big chunk of that were governmental fees.
I think (?) a lot of this depends on locality, I've previously bought two houses in two states, and the closings costs between the two didn't seem to jibe at all. There were various things in one state that simply didn't exist in the other. Good reminder to take that into
consideration.
With a large enough down payment, private money lenders I would think would be interested...
ask some real estate brokers what they do for clients in this situation. They are bound to have seen this before.
You know, I had only ever heard of hard money lenders from the flipping shows on tv, and their mentions of super-high interest charged by the day made me feel like this was only a short-term option. But after some googling, I see that there are in fact people willing to do smaller mortgages this way. Good idea since any loan we get we'd have paid off in a few years, so if we could get higher but still sane interest it might not cost *that* much more than a trad mortgage... and then it would function more like a cash purchase, saving on the closing as Laura mentioned. Good point about asking brokers as well.
Could someone just get a W2 job for a few weeks? Back when we were mortgage shopping I believe you only needed to have a job for 2 weeks for that income to be considered.
Huh, I wonder if this is still the case. As self-employed people, we've needed "at least" two years of back taxes and a ton of other docs. Is it really this much easier--even post-2008--to get a mortgage for W2 workers? My husband could easily get a 3-6 month contract w2 job in the industry he is in if that would solve everything! Will have to look into this for sure.
A conventional mortgage approval will be based on meeting the minimum credit score and having an acceptable Debt to Income ratio. If the payment will be too large of a portion of your income, then you probably won't be able to get a conventional loan.
We're not planning on getting a loan that is too large of a portion of our income. In fact, this is exactly what is frustrating. Since there is a human element to loan approval, it doesn't run like a calculator. Banks want larger loans with larger incomes, and often have mins. for amount they will lend. I have seen mortgage ads that come right out and say something like "$200k minimum loan amount." For our previous purchase, it was excruciatingly hard to find a bank willing to deal with a sub-100k mortgage.
Let's say it was an inhuman calculator making the decisions, with 30% allotted for housing. Then (just for easy math) a person making $1,000 a month could make a $300 mortgage payment, and so on. But a bank app that goes before a human will more likely get "You can't afford a house making only 1k a month because that's poverty level!" rather than giving a small loan with a $300 payment. A certain threshold seems to be necessary for a "mortgage," and below that a "personal loan" is usually suggested, which is functionally so different.
