Before you start house hunting, it’s important to understand how lenders evaluate income, credit, debt, and property types when multiple borrowers are involved.
Can You Combine Income When Buying a Home Together?
In many cases, yes—but it depends on who is listed on the loan.
When multiple borrowers apply together, lenders may be able to use combined household income to qualify for the mortgage. However, every borrower’s financial profile matters. While higher combined income can increase buying power, lenders also review the full financial picture.
How Debt and Credit Scores Are Evaluated
When more than one borrower is on the loan, all debts from all borrowers are included in the debt-to-income ratio. This means student loans, car payments, credit cards, and other obligations from each applicant will be counted.
Credit scores also play a major role. Most loan programs use the lowest middle credit score among all borrowers to determine loan eligibility, pricing, and mortgage insurance requirements. One lower score can impact the entire loan.
Loan Options for Multi-Generational Homes
Several mortgage programs allow financing for homes designed to accommodate multiple generations, as long as the property meets loan guidelines.
FHA and Conventional Loan Options
Both FHA and conventional loans may allow:
- Larger single-family homes
- Homes with a mother-in-law suite or guest quarters
- Properties with a secondary living space behind the main home
In addition, borrowers may be able to purchase:
- Duplexes
- Triplexes
- Fourplex properties
As long as one unit is owner-occupied and the property meets program requirements, these options can be a practical solution for multi-generational living.
Property Guidelines Matter
Not every property qualifies for every loan program. Zoning, layout, and how the additional living space is classified can affect eligibility. It’s important to review property details early to avoid issues once you’re under contract.
Planning Ahead Is Key
Multi-generational home purchases involve more moving parts than traditional home loans. Reviewing credit, income structure, and property goals early can help ensure a smoother approval process and realistic expectations.
If you’re thinking about buying a home with parents or adult children, working with a local mortgage expert who understands Texas lending guidelines can make a significant difference.
Get Guidance for Your Multi-Generational Home Purchase
Buying a home together is a big decision, and the financing should support your long-term goals. Liberty Star Mortgage in Fulshear, Texas helps families explore the right loan options for multi-generational living.
If you’re considering purchasing a home for multiple generations, get in touch with Collette Horton to review your options and determine the best mortgage strategy for your situation.
The post How to Finance a Multi-Generational Home in Texas appeared first on Liberty Star Mortgage.
]]>Understanding how different loan programs treat credit scores and debt can help you structure your mortgage in the most strategic way.
How Conventional Loans Handle Credit Differences
With a conventional mortgage, lenders have more flexibility when structuring the loan.
If one borrower has strong credit and sufficient income to qualify on their own, the loan may be structured using only that borrower’s income and credit. In this case, the co-borrower with lower credit may not be included on the loan at all, which can help:
- Secure better interest rates
- Reduce mortgage insurance costs
- Improve overall loan approval terms
This approach can be especially helpful for married couples or partners where one borrower clearly qualifies independently.
Government Loans and Credit Score Rules
Government-backed loans follow stricter guidelines.
For FHA, VA, and USDA loans, lenders are required to:
- Pull credit for all borrowers
- Use the lowest credit score to determine eligibility and pricing
- Count all debts from every borrower toward the debt-to-income ratio
Even if one borrower has excellent credit and strong income, the debts of the co-borrower with lower credit will still be factored into the loan qualification.
Why Loan Structure Matters
Choosing the right loan program can have a major impact on:
- Mortgage approval
- Interest rate
- Monthly payment
- Long-term affordability
In some cases, using a conventional loan and excluding the lower-credit borrower from the loan may be the most effective option. In others, a government loan may still make sense based on down payment requirements or eligibility benefits.
Planning Ahead Can Improve Your Options
If you’re considering buying a home with someone who has lower credit, it’s important to review your options early. A pre-approval allows you to compare loan structures and determine which strategy best supports your financial goals.
Every situation is unique, and small differences in credit or debt can change the best path forward.
Get Expert Guidance on Structuring Your Mortgage
Navigating credit differences between borrowers doesn’t have to be overwhelming. Liberty Star Mortgage in Fulshear, Texas helps buyers evaluate loan options and structure mortgages in a way that makes the most financial sense.
If you’re buying with a co-borrower and want to understand how credit scores and debt will affect your loan, get in touch with Collette Horton to explore your best options.
The post Buying a Home With a Co-Borrower Who Has Lower Credit appeared first on Liberty Star Mortgage.
]]>Understanding how student loans are calculated can make a big difference in whether you qualify for a home loan and how much home you can afford.
Do Deferred Student Loans Count Toward a Mortgage?
In most cases, deferred student loans are still counted when qualifying for a mortgage. Lenders must account for future repayment obligations, even if payments are not currently required. This is especially important for borrowers with multiple student loans or large balances.
How Student Loans Are Calculated by Loan Type
The way your student loans are counted depends on the type of mortgage you are applying for. Each loan program follows different guidelines.
FHA and Freddie Mac Loans
For FHA loans and Freddie Mac conventional loans, lenders calculate your student loan payment using 0.5% of the outstanding balance. This calculated amount is used as your monthly obligation, regardless of whether the loan is deferred.
For example, if your total student loan balance is $50,000, the lender will count $250 per month toward your debt-to-income ratio.
Conventional Loans Using Fannie Mae
Fannie Mae guidelines are more conservative. For these loans, lenders calculate your student loan payment using 1% of the outstanding balance unless a fully amortized payment is documented.
Using the same $50,000 balance, $500 per month would be counted toward your qualifying debt.
Why Multiple Student Loans Matter
Many borrowers don’t realize how quickly student loan calculations can add up. If you have several individual loans—five, ten, or even more—the combined calculated payment can significantly impact your debt-to-income ratio, which is one of the most important factors in mortgage approval.
Even borrowers with strong income and credit can be pushed over qualifying limits if student loan balances are not reviewed early in the process.
Planning Ahead Makes a Difference
If you have student loans and are planning to buy a home in Texas, it’s important to review your loan options before starting the home search. In some cases, choosing the right loan program or documenting repayment terms properly can improve your ability to qualify.
A mortgage pre-approval allows you to understand how your student loans affect your buying power and helps avoid surprises once you’re under contract.
Talk to a Local Texas Mortgage Expert
Student loans do not automatically disqualify you from buying a home, but they do require careful planning. If you have questions about how your student loans impact your mortgage qualification, Liberty Star Mortgage in Fulshear, Texas can help you evaluate your options and create a strategy that fits your financial goals.
Reach out to Collette Horton to review your student loan situation and determine the best path forward for homeownership in Texas.
The post How Student Loans Affect Mortgage Qualification in Texas appeared first on Liberty Star Mortgage.
]]>Can Grant Programs Help with Closing Costs?
Yes, several first-time homebuyer assistance programs can help cover closing costs, prepaid items, or even down payment requirements. These grants and assistance programs are designed to make homeownership more accessible, especially for buyers who may not have the funds saved upfront.
But here’s what many buyers don’t realize.
What Most People Don’t Know
When you use a down payment or closing cost assistance program:
- The program sets your interest rate
You won’t have the flexibility to shop for the lowest available rate. The program will assign a rate—often higher than market rates—to offset the risk they take on by offering assistance. - You must complete a required homebuyer education course
This online course is a common requirement and ensures you’re prepared for the responsibilities of homeownership. It’s helpful, but it adds time to the process. - There may be additional fees involved
Assistance programs often come with added lender or program fees, which can affect your overall loan cost.
These aren’t deal-breakers, but they’re important to factor in when deciding whether a grant program is the right choice for you.
Is a Grant Program Right for You?
Grant programs can be a smart option if you’re short on funds and need help getting into your first home, but they aren’t always the most cost-effective solution long-term. Depending on your financial situation, there might be other strategies we can use to structure your loan that make more sense for your goals.
If you’re a first-time homebuyer and curious about using a grant to help with closing costs, let’s talk.
The post First-Time Homebuyer Grant Programs: What You Need to Know About Help with Closing Costs appeared first on Liberty Star Mortgage.
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What is the Minimum Credit Score to Buy a Home?
A common question many buyers ask is: “What’s the lowest credit score I can close with?”
- FHA loans allow you to qualify with a credit score as low as 580. However, this typically comes with higher interest rates, increased closing costs, and additional lender fees.
- To secure better loan terms and lower costs, a 620 credit score is recommended for FHA loans.
- Conventional loans typically require at least a 620–640 credit score, while VA and USDA loans may have more flexible requirements.
When Should You Buy with a Low Credit Score?
There are scenarios where it makes sense to buy a home even if your credit score is lower than ideal:
- You need stable housing, and rent is becoming unaffordable.
- Your credit score is expected to improve soon. Once your score increases, refinancing could help you secure better terms.
- You have strong financial reserves. If you can handle the higher mortgage costs and plan for future refinancing, buying now may still be a good move.
When Should You Wait to Buy?
If you can improve your credit before purchasing a home, it may save you thousands of dollars over the life of your mortgage. It may be best to wait if:
- You need time to build your credit and qualify for lower interest rates.
- You are managing high debt that could affect your mortgage payments.
- You need to save more for a down payment and closing costs.
Your Best Path Forward
If you have a lower credit score and are unsure if now is the right time to buy, the key is having a plan. Sometimes, it’s better to purchase now and refinance later. Other times, waiting could be the smarter move.
Evaluating your financial situation, loan options, and long-term goals will help you determine the best path forward. No matter where your credit stands today, with the right strategy, homeownership can still be within reach.
The post Buying a Home with a Low Credit Score: What You Need to Know appeared first on Liberty Star Mortgage.
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Here’s a look at some of the best options for reducing your down payment and making homeownership more attainable:
1. First-Time Homebuyer Loan: Just 3% Down!
If you’re a first-time homebuyer, there’s no need to stress about saving 20% of your home’s price. With a First-Time Homebuyer Loan, you can qualify with as little as 3% down. This option makes homeownership more accessible without the burden of a massive upfront payment.
2. FHA Loans: Only 3.5% Down!
Federal Housing Administration (FHA) loans are another fantastic option. With only a 3.5% down payment requirement, FHA loans are designed to help lower-income and first-time buyers achieve their dream of homeownership. This lower down payment requirement can be a game-changer for many buyers.
3. VA and USDA Loans: No Down Payment Needed!
For veterans, active-duty military members, and eligible rural buyers, VA and USDA loans offer the incredible benefit of no down payment at all. These loans are specifically designed to make homeownership accessible without the need for a large upfront payment.
Curious About What You Might Qualify For?
Don’t let the misconception of a 20% down payment hold you back from achieving your homeownership dreams. Reach out to Collette Horton at Liberty Star Mortgage today and take the first step towards your new home!
The post Don’t Let a 20% Down Payment Freeze You—Explore Your Home Buying Options! appeared first on Liberty Star Mortgage.
]]>- Property Tax Exemption
One of the most significant benefits available to 100% disabled veterans in Texas is the property tax exemption. This exemption allows disabled veterans to exempt the full value of their home from property taxes. This can save disabled veterans thousands of dollars each year and provide them with financial stability.
- Education Benefits
Texas offers a number of education benefits to disabled veterans, including free tuition at state-supported colleges and universities for up to 150 credit hours. Disabled veterans can also receive financial assistance for books and other education-related expenses. These benefits are available to veterans who have been honorably discharged from the military and meet the eligibility requirements.
- Medical Benefits
Disabled veterans in Texas can also receive medical benefits, including free healthcare at VA hospitals and clinics throughout the state. These benefits are available to veterans who have been honorably discharged and have a service-connected disability.
- Employment Assistance
Texas offers employment assistance to disabled veterans through the Texas Veterans Commission. This commission provides job training and placement services, as well as assistance with resume writing and interview skills. This can help disabled veterans find meaningful employment and achieve financial independence.
- Financial Assistance
Disabled veterans in Texas can also receive financial assistance through the Veterans Assistance Fund. This fund provides financial assistance to veterans who are experiencing financial hardship due to a service-connected disability. This assistance can be used to pay for housing, utilities, and other basic needs.
In conclusion, being a 100% disabled veteran in the state of Texas comes with many benefits. These benefits can help provide financial stability, access to healthcare, educational opportunities, and employment assistance. If you are a 100% disabled veteran in Texas, be sure to take advantage of these benefits and resources to improve your quality of life.
Collette Horton is a mortgage loan originator licensed in TX, LA and OK.
The post Texas Benefits for Veteran’s with 100% Disability appeared first on Liberty Star Mortgage.
]]>VA Loan in Texas:
A VA loan is a mortgage loan that is guaranteed by the Department of Veterans Affairs. It is available to eligible veterans, active duty service members, and certain surviving spouses. The VA loan offers several benefits, including:
- No down payment required – This is one of the most significant advantages of the VA loan. Borrowers can finance 100% of the purchase price of a home, which means they don’t have to save up for a down payment.
- Lower interest rates – VA loans typically have lower interest rates than conventional mortgages. This can save borrowers thousands of dollars over the life of the loan.
- No private mortgage insurance – Unlike conventional mortgages, VA loans do not require private mortgage insurance (PMI). This can save borrowers hundreds of dollars per month.
- Easier credit qualifications – The VA loan has less stringent credit requirements than conventional mortgages. This makes it easier for veterans and active duty military members to qualify for a loan.
Texas Vet Program:
The Texas Vet program is a separate home loan program available only to Texas residents who are veterans, active duty military members, or members of the National Guard or Reserve. Like the VA loan, the Texas Vet program offers several benefits, including:
- No down payment required – Texas Vet loans also allow borrowers to finance 100% of the purchase price of a home, which means no down payment is required.
- Lower interest rates – Texas Vet loans typically have lower interest rates than conventional mortgages.
- No PMI – Texas Vet loans do not require private mortgage insurance, which can save borrowers hundreds of dollars per month.
- Flexible credit requirements – The Texas Vet program has flexible credit requirements, making it easier for veterans and active duty military members to qualify for a loan.
So, what are the differences between the two programs? Here are a few:
- Eligibility – While both programs are available to veterans and active duty military members, the Texas Vet program is only available to Texas residents. The VA loan is available to eligible individuals regardless of where they live.
- Funding fee – The VA loan requires a funding fee, which is a one-time payment made at closing. The funding fee is used to help offset the cost of the VA loan program. The Texas Vet program does not require a funding fee.
- Loan limits – The VA loan has higher loan limits than the Texas Vet program. In Texas, the VA loan limit is $548,250 for 2021, while the Texas Vet loan limit is $424,100.
In conclusion, both the VA loan and the Texas Vet program offer advantages to eligible veterans and active duty military members who are looking to purchase a home in Texas. While the VA loan is available nationwide and has higher loan limits, the Texas Vet program is only available to Texas residents and does not require a funding fee. Ultimately, the best option will depend on the individual borrower’s needs and eligibility. It is recommended to speak with a lender to determine which program is the best fit.
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