can a resident's salary qualify for low-income housing?

[so721]

Hi,
has anyone tried getting low income housing or FHA financing on a home with a resident's salary?

I earn approximately $49K per year with my intern year. I was just wondering if anyone has tried this.

Thanks

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[typhoonegator]

I would imagine it depends on the median income and the median housing costs in your area. However, your income is not expected to remain stable, and these programs have ways of weeding people like you out. At least, I hope they do, as these social programs are not designed for someone who will likely be making a salary higher than 80-90% of the working US population inside of 5 years.

 

[RangerBob]

I don't see how a $50,000 salary (the median US household salary) would qualify you for low-income housing, but maybe if you're in NYC and have 8 kids it could. I personally haven't heard of any residents that qualified.

I used to live just outside SF on $35,000 and I thought I lived pretty comfortably. $50,000 is actually a lot of money.

If you're planning on buying a home in residency (usually a bad decision, though I bought one...) then you can look into physician loans--there's a big thread on that.

 

[so721]

I would imagine it depends on the median income and the median housing costs in your area. However, your income is not expected to remain stable, and these programs have ways of weeding people like you out. At least, I hope they do, as these social programs are not designed for someone who will likely be making a salary higher than 80-90% of the working US population inside of 5 years.

Uhh, I have 3 kids and a spouse to support with this salary, and I also have $250K+ loans from med school as well.

I guess I will look into the Physician loans.

 

[RangerBob]

With three kids and a spouse (I assume your spouse isn't working?), you may qualify for $0 payments through PAYE. My co-intern had four (possibly five--one was born partway through the year and I forget when he applied for IBR/PAYE) kids and a non-working spouse and he qualified for the $0 monthly payments. Either way, your IBR/PAYE payment, if not $0, should be very low.

Unfortunately I don't think anyone takes your debt into account when it comes to low-income assistance. But lenders most certainly take it into account when you apply for a loan--which is why the physician loan is generally the only way a resident can buy a home. Whether a resident should buy a home is another question, but I assume you've already done your research on whether buying makes more sense than renting, or are currently doing the research now.

 

[typhoonegator]

I hear you, but there are plenty of people in the same boat who don't have a big financial windfall just down the road. You can put your loans into forbearance, and take loans out for a couple of years if you need to bridge a gap.

Plus, even if you could qualify to purchase a townhome or something in a subsidized housing development made available by your city, it might not be a good investment for you. You might be forced to sell once your W2 shows an income over a certain threshold (which is sometimes stipulated in the agreement between the housing developer and the city), and if property values change, you likely won't be allowed to sell for over a certain percentage of what you bought it (to prevent people from buying in an otherwise attractive neighborhood for bargain-basement prices and then turning around and collecting a huge profit by selling it at fair market value). So you'd rack up mortgage fees and tie up a down payment only to be on a short leash with little opportunity to do anything with your equity.

Finally, there are physician loans and there are physician mortgage offers. Physicians can get great rates on 30 year fixed mortgages even with much smaller down payments than would typically be required. Bank of American is a rather universal example although you might be able to do even better with a local partner.

 

[dpmd]

I thought FHA loans were for any first time homebuyer. Maybe you are referring to some downpayment assistance programs that are available in certain places? I think one of our mortgages was an FHA loan (bought a condo in med school since my husband made enough income, and bought a house in residency, both were refinanced at certain points so I can't remember which one it might have been) and our income would have been higher than you listed at the time, so you should be fine getting one.

 

[dpmd]

I would imagine it depends on the median income and the median housing costs in your area. However, your income is not expected to remain stable, and these programs have ways of weeding people like you out. At least, I hope they do, as these social programs are not designed for someone who will likely be making a salary higher than 80-90% of the working US population inside of 5 years.

I doubt they weed people out because they are supposed to get a good paying job in the future. They can however stop your eligibility once you make enough money. In my county 49,150 is the upper limit of low income for a family of 5 so the OP could try to get public housing assistance intern year, but likely would no longer qualify after that.

 

[so721]

I doubt they weed people out because they are supposed to get a good paying job in the future. They can however stop your eligibility once you make enough money. In my county 49,150 is the upper limit of low income for a family of 5 so the OP could try to get public housing assistance intern year, but likely would no longer qualify after that.

Yeah my salary will go up higher so likely i would not qualify after intern year anyways.

 

[dpmd]

Yeah my salary will go up higher so likely i would not qualify after intern year anyways.

Then again my county has low cost of living so other areas might have a higher cutoff.

 

[the argus]

Many states have programs for first time homebuyers that are similar to FHA loans except often they have better interest rates (~3.5%). Many also have downpayment assistance programs. Usually there is an upper income limit but a resident salary is almost always below it.

The "physician mortgages" that are available now are usually just standard 30 year fixed mortgages, but they allow,
1. a reduced downpayment (usually ~5%)
2. more leeway when calculating your debt-to-income ratio as they realize docs have more debt but also higher future earning potential.

State/federal programs for first-time homebuyers are almost always better options (if you qualify for them) than "physician mortgages" nowadays.

 

[BoardingDoc]

Uhh, I have 3 kids and a spouse to support with this salary, and I also have $250K+ loans from med school as well.

I guess I will look into the Physician loans.

Is your spouse not working because it's cheaper to take care of the kids and not work, than it is to work and pay for child care for the kids who aren't in school all day?

If your spouse is simply staying home because they'd prefer to be a mom or a dad as their sole vocation, then that should probably change.

 

[typhoonegator]

State/federal programs for first-time homebuyers are almost always better options (if you qualify for them) than "physician mortgages" nowadays.

Eh, I think that depends on the market. In some of Boston's suburbs right now, with upwards of 8 offers per listing (many of which are cash offers and almost all are over asking), the seller has so many options that they can basically sniff out the terms they want even among buyers offering the overall same sale price. They want a guaranteed closing with no fuss, and they know they're more likely to get that with a physician mortgage than a first-time homebuyer plan (even if in theory a physician could get either). Not fair but whatever.

Maybe for really low incomes and cheap homes it's a wash for the firs-time homebuyer loans, but for anything in a tight market in a desirable location, the MD loan is the only way they're going to let you make a big offer without a big down-payment.

 

[dyeguy21]

Uhh, I have 3 kids and a spouse to support with this salary, and I also have $250K+ loans from med school as well.

I guess I will look into the Physician loans.

Seriously look into PAYE/IBR as stated above, its kinda bull crap that no one really lets you know these programs exist, but such is life. You will likely qualify for very low/$0 repayments while you are making resident income.

Google them, white coat investor has a few posts on it that will help you understand it better.

 

[deleted480308]

I would imagine it depends on the median income and the median housing costs in your area. However, your income is not expected to remain stable, and these programs have ways of weeding people like you out. At least, I hope they do, as these social programs are not designed for someone who will likely be making a salary higher than 80-90% of the working US population inside of 5 years.

future income is not a calculating factor

 

[evilbooyaa]

Is your spouse not working because it's cheaper to take care of the kids and not work, than it is to work and pay for child care for the kids who aren't in school all day?

If your spouse is simply staying home because they'd prefer to be a mom or a dad as their sole vocation, then that should probably change.

What? I don't really agree with that. Does every single family need to have 2 working members?

 

[BoardingDoc]

What? I don't really agree with that. Does every single family need to have 2 working members?

Every family? Absolutely not. If you have the financial luxury or if it is less expensive (re: my comment about the cost of daycare) to be a stay at home parent, then by all means go ahead. There are certainly families out there where paying for daycare and earning a salary is a net LOSS compared to having one spouse stay at home.

That said, if your family is struggling financially and your unemployment is a financial burden, it may be worth reassessing your priorities.

 

[Law2Doc]

When I was in law school one classmate who was already on full scholarship and maximum student loans was also collecting public assistance/welfare, while living quite affluently. Most of the school found it a pretty appalling abuse of the system (even though it was really none of our business), and it probably got uncomfortable for her. Just because you financially technically could meet the definitions doesn't mean you should take a low income housing spot. There are people who actually need these funds to satisfy basic needs, and aren't a few short years away from a six digit salary. As an MD/DO you can always get more loans. I don't think it's a good idea to be that guy/gal who exploits the system, IMHO.

 

[candbgirl]

I think OP was the person who wanted out of his residency because he matched so low on his list. He was so disappointed and angry. I think his wife is a teacher but is homeschooling their kids because OP felt the area where he matched was so unsafe. So from the get go he was looking to get out. Maybe the wife could sub a couple of days a week for extra money. Schools are always looking for good subs.

 

[Raryn]

I knew some medical students on various forms of public assistance that they qualified for due to their having children, but haven't heard of any residents. I suppose if you lived in a high enough cost of living area and had enough kids...

 

[Terry Toma]

Post edited. I just read a few more posts, and see that you have a number of dependents. That will push your income limit up, and may actually allow you to qualify in a lot of areas. Might be worth a shot. Check out your state's housing finance agency website. They should have a list of properties.

Debt won't matter, but your income could well qualify you.

Some people have made comments saying that you might be forced out when your income rises. This generally isn't the case. Under the low-income housing tax credit program (the program under which most affordable housing is produced today), you have to qualify when you move in. You only get thrown out thereafter if the property is refinanced, which can't happen until the property is at least 15 years old.

 

[dpmd]

I actually developed low-income housing before returning to school to wrap up my med school prereqs. You probably aren't going to be earning a low enough income to qualify. 60% of area median income is the highest income that qualifies for "affordable housing" under the current major program for producing such housing. This income is in the $20-$30K range in most areas. You might qualify for Section 8 in NYC, but you'll be done with residency before you get off the waiting list there.

There are a few exceptions to the 60% limits (different programs have different rent/income restrictions, and private sources can set their own rules), but I wouldn't bet on finding anything that would allow a single individual earning ~$50K.

His is a family of 5

 

[Terry Toma]

Check out the link below for income limits. Most affordable housing falls under the program "IRS Section 42 Low Income Housing Tax Credit." That option should be selected by default on the first pulldown menu. For the dates it asks you about, I'd just select the last option on both menus (they have a lot of options to choose from, but these variables don't make much difference for your needs). Then you can click the "view rent and income limits" button and scroll down to the bottom to the LIHTC Income Limits for 2015 chart and find the max 60% income for a family of 5.

http://www.novoco.com/tenant/rentincome/calculator/z1.jsp

 

[ThoracicGuy]

Uhh, I have 3 kids and a spouse to support with this salary, and I also have $250K+ loans from med school as well.

I guess I will look into the Physician loans.

No decent rentals or apartments available?

 

[gutonc]

No decent rentals or apartments available?

I was wondering this as well. Unless you're in a 5+ year residency, or living in one of the few cities where the rental market is tighter than the sales market, buying as a resident is usually somewhere between a really bad financial decision and just plain stupid.

 

[ThoracicGuy]

I was wondering this as well. Unless you're in a 5+ year residency, or living in one of the few cities where the rental market is tighter than the sales market, buying as a resident is usually somewhere between a really bad financial decision and just plain stupid.

I was in general surgery residency for 7 years (2 years research) and bought a house. I lost money on it.

 

[gutonc]

I liked this, but I really meant dislike 🙂

Most of my friends who bought are making killings...7 year residency and they bought at the nadir of the housing fallout (in 09-10 or so). I unfortunately for life and financial reasons didn't buy and rents have gotten astronomical over the past couple years

I started residency in 2006. Every one of my friends except one who bought a house and then had to sell at the end of IM residency lost their shirts.

The one who didn't take a bath had a husband that was an unemployed architect and licensed contractor who spent those 3 years renovating and adding on to the house, mostly by himself.

 

[dpmd]

The problem comes in having to sell at a particular time. I know people who i did residency with whose houses had dropped significantly when it came time for them to leave. One had to sell because he needed the money and ended up with a short sale. The other could afford to carry it for a while and then rented it out. I think she still is renting it and at least no longer losing money. I have come out nicely ahead on my med school condo because i was able to keep it as a rental (would have came out about even if i had sold it, but now value is a lot more plus it cash flows well so i plan to keep it). The house i bought in residency i was lucky to buy at a low point and luckily i like it so i have a nice low mortgage payment and a bunch of equity if i need it (although the upgrades i have done i have been able to pay cash for). Having some flexibility is helpful.

 

[ThoracicGuy]

I liked this, but I really meant dislike 🙂

Most of my friends who bought are making killings...7 year residency and they bought at the nadir of the housing fallout (in 09-10 or so). I unfortunately for life and financial reasons didn't buy and rents have gotten astronomical over the past couple years

Yeah, I sold during the nadir...

 

[Crayola227]

There's no harm in contacting the DHS for the state where you will be going, but keep in mind often the wait for section 8 subsidy is 2 plus years.

The only speedy help for poverty is foodstamps, medicaid, energy asistance, that varies by state.

You likely would have a better chance with food stamps with your income and dependents, not sure.

This is totally the wrong place to figure this out. Every state has a website and you can loom up federal poverty line guidelinez easy.

The rest of the advice here is not really so much about public assistance.

If you qualify go for it. If you get to that 6 figure salary pay it forward, vote to pay higher taxes and pay them. Contribute more to charity. In fact, you could donate as much aid as you used as a resident when you are an attending.

Don't ever live like there will be money or a job or a family to rely on in the future.

 

[shiftingmirage]

With low income housing (in Chicago anyways) comes crime, gangs, drugs, crappy schools, etc. How universal that is, I'm not sure. Gangs probably are not as bad elsewhere, but I'm assuming there is still crime and drugs. Do you want to raise your family in that situation?

 

[rokshana]

With low income housing (in Chicago anyways) comes crime, gangs, drugs, crappy schools, etc. How universal that is, I'm not sure. Gangs probably are not as bad elsewhere, but I'm assuming there is still crime and drugs. Do you want to raise your family in that situation?

you would be surprised where there is section 8 housing...i think in massachusetts, apt complexes of a certain size have to offer a certain number of them as section 8 housing...

 

[candbgirl]

There is lots of low income housing in some very nice areas of Chicago. So shifting mirage what you stated isn't exactly always true.

 

[shiftingmirage]

There is lots of low income housing in some very nice areas of Chicago.

I don't believe I said there wasn't. Cabrini Green, which was a housing project so different than low income housing, was in the Near North side sharing borders with the Gold Coast, Lincoln Park, and River North, all very nice parts of the city. There was still crime, drugs, gangs.

So shifting mirage what you stated isn't exactly always true.

Most things in life arent "exactly always true". They are generally true or most often true, but not absolute.

My point was simple, with low income housing, there are generally some sacrifices one makes. Those sacrifices should be considered and weighed against the benefits.