How a Young First-Time Home Buyer Got a Bigger Home Loan

“At 23, I never expected to buy a house,” says Jose Fuentes, an auto adjuster in New Jersey. “I knew I was going to need help, that it was going to be an uphill battle. But I knew it could be done.” Not just a young first-time home buyer in a competitive market, Jose is also a DACA recipient, which can complicate the process and impact the types of loans available.

“My family was a huge motivator for house hunting,” says Jose, who was looking for a place not just for himself, but also for his parents, brothers and dog. His situation growing up influenced the home he wanted for his family. “We didn’t have much. We had to sleep on the floor on mattresses,” he says. “I always imagined later in the future owning a house, where we would have a lot of space, where we would have room for everyone.” His wish list included three bedrooms, two bathrooms, high ceilings and room for three cars.

“I didn’t know anything about the home buying process. It was a learning experience from the start,” says Jose. “The first step I took was finding the right bank and finding the right loan for me.” He was approved for both a first-time home loan and a conventional loan, each for around $100,000. But that amount wasn’t going to buy a comfortable home for the whole family, so Jose kept looking.

“I Googled options for getting a loan when you don’t have the credit or the income,” he says. That’s when he heard about ineligible mortgages, which don’t have the same stringent financial requirements. “I inquired with a few lenders and went with the loan offer that had the lowest down payment because it would help me achieve a higher budget.”

With the ineligible mortgage secured, Jose budgeted $325,000. This maximum price would leave enough money to cover a down payment of $50,000 (15%) and closing costs, which he estimated at around $12,000. Then Jose and his real estate agent, Frank, started looking for houses. Jose estimates that they watched three times a week for over two months. He started strong, bidding on the first home he visited. “I had hope thinking that my parents and I were going to move into this house, just because we made a pretty high offer,” Jose said. But the offer was not accepted.

After losing a second highly competitive property, they decided to try a new strategy: focus on less exclusive neighborhoods and listings with flaws or factors that might deter other buyers. “We knew we had to approach things differently, that we couldn’t keep looking at move-in ready, seemingly perfect homes,” he says.

That’s how he ended up in Elizabethport in a 2,600 square foot house with four bedrooms, two bathrooms and a wide driveway. “Honestly, I fell in love with it when I saw it,” says Jose. “I was thinking, hey, maybe those other two houses I got rejected for were building this one. And maybe this will be the one for me.” However, its current tenants – an additional hurdle that some buyers are unwilling to maneuver – caught the attention of Jose and Frank.

“I knew it was a high risk, but something was going well in the house,” he says. They made a bid the day they watched, but again he lost the bid. But three weeks later, his agent called to say the original buyers had been turned down because of their mortgage – an FHA loan that required the new owners to live in the property at closing, something they couldn’t do. because it was occupied by tenants.

Jose was the second offer, and the house came to him. With a listing price of $300,000, Jose bid $318,000. Asbestos in the basement discovered during the home inspection added credit to the home, bringing the price down to $315,000. He paid a deposit of $47,000 and $14,000 in closing costs.

Jose was able to work with tenants to ensure they had time to find new accommodation. He and his family have now been in the house for over six months. “After we settled in and handed over the keys to our old apartment, it was a great feeling,” says Jose. “We felt like we finally had something to call our own.” While living in an apartment, José’s parents were saving money for renovations to a future home. Now they are spending those savings to turn the house into a home, while viewing it as an investment in property and their quality of life as well.

Jose estimates they spent about $15,000 on renovations. The hardwood floors in the living room and dining room have been recently restored. The dark border of the flooring carries over to the design elements; Once all beige, the walls now feature an accent of chair rail molding with the lower portion a similar rich brown. The white trim adds a tailored look while blending the floor heating elements into the design. Nearby, a closet wall has been removed to create an office for Jose’s mother.

The attic is Jose’s bedroom and the location of another renovation project. Installing the lighting immediately created a cozier space, and the fresh paint elevates the walls and ceiling into a personal retreat.

Needing to accommodate at least three cars, outdoor space was a big part of Jose’s wish list, and it was also a priority for improvements to the property. To highlight the 3,920 square foot lot, they added a perimeter fence that brings comfort and privacy to the urban backyard. Up front, they installed an electric gate for $7,000 – the little luxury that saves time and effort while providing security. They also increased the efficiency of the house with solar panels. And really, they’re just getting started. “There’s a lot of space. There’s a lot of potential, and I’m very happy to keep working on it over the years,” Jose said.