Signed as Guarantor to Friend’s Apartment Lease

Home Forums Purchase Program Signed as Guarantor to Friend’s Apartment Lease

Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #72781
    Edmundhe
    Participant

    Hi all,

    A month ago, I signed as the guarantor to my friend’s 10 month, $2000 per month apartment lease. I read in another post that this would be counted as debt. I don’t have any other debt and have over $120k saved which allows me to easily pay off the lease in full if I needed to. I haven’t begun the NACA process yet and my workshop is in mid-January. How will this be calculated towards my Debt to Income ratio? What can I do to purchase as much house as possible? I also work under a union and have large gaps in my employment, but overall have consistently made at least 65k annually since my 2018 tax return.

    Thanks

    #72782
    Nelsont
    Member

    2000/month will be added to your DTI.

    Release yourself as the guarantor to buy as much house as possible.

    Making money doesn’t mean anything if it’s not consistent. You will need 24 consecutive months of employment without a gap of more than 30 days unless you can prove the new job was secured within the first 30 days or you went back to school and paused your employment but didn’t quit.

    #72783
    Edmundhe
    Participant

    If I move in with my friend and pay the full amount of rent every month, would that still be considered debt?

    Also, my line of work is similar to that of a contractor’s. Some months I get work and some months I get unemployment. I can show that I have consistently made at least 65k annually since the start of 2018 from my tax returns, including 2020 when I file it. Is that unacceptable?

    #72784
    Nelsont
    Member

    Anything you have your name attached to is considered debt.

    Anything you are paying that you don’t have your name attached to is not recommended.

    Being a co signer or guarantor you can eliminate those payments from your debt after the other party makes 12 consecutive months of on time payments without help from you.

    Bottom line your friends rent is your debt until the lease is up. Moving in with your friend can help if that means your current rent is eliminated.

    With that said 2000/month is living above your means. You can be approved for a maximum of 40% DTI with no more than 31% going to rent. At a 65k salary you will be approved for a maximum of 1650ish per month as long as all your bills including rent don’t exceed 2100 or so.

    As far as your tax returns go your counselor will advise you at your intake session.

    Remember a mortgage loan is the hardest type of loan to get. What gets you a nice appartment and a fancy car is often not good enough for a mortgage. There is no shame in waiting to meet criteria if you need to. Every naca member will be qualified if they follow the program guidelines and advice of their counselors. Good luck!

    #72786
    Edmundhe
    Participant

    Thanks for all the responses Nelson
    I will try to switch guarantors with someone else to get my name off the lease.
    I recognize that a mortgage is the hardest type of loan to get, but this is something I’ve dreamed of achieving for the last 3 years. I’ve lived well below my means, saved every penny I could, and drive a minivan from 2002. I never thought helping a friend move out from an abusive household would delay my own goals. I’m willing to wait to meet the criteria but of course I’d like to also achieve a mortgage as soon as possible.

    #72787
    Edmundhe
    Participant

    Also, in 2019 my income was 85k which is what allowed me to sign as the guarantor for the 2k/month apartment.
    2018 – 65k
    2019 – 85k
    2020 ~ 65k

    Considering the abrupt nature of my work(roughly working 6 months and collecting unemployment 6 months), do you have an idea of how the underwriters would calculate my gross income?

    #72789
    Nelsont
    Member

    2019 and 2020 would normally be averaged. I’m not sure how it would work with unemployment. Your counselor will give you advice tailored specifically to you and your situation.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.