Expert: Brian HAHN - 9/20/2009

Question
is it possible to find a first time home buyer loan for more than the purchase amount? I.E. to pay off your current car loan and free up that payment amount to be used as part of your mortgage. I cant find an answer anywhere. and with these calculators and listing my car payment I'm over stretched, but without a car payment i can buy a home at an affordable monthly payment. Is there a solution or help for me?

Answer
No.
Your mortgage loan is based on the lower of either the sales price or appraised value.
Adding debt on top is not an option until you develop equity in your home and can do what is called a cashout refinance - then, you can finance a new FHA loan up to 85% of the appraised value at the time of doing the new loan.
I hope that helps you out.

In my opinion, you have two options:
1) Refinance your current auto loan to reduce your monthly payment
2) Get a gift from a family member to payoff your car loan.

If your buying a home by yourself and your annual gross income is $75,000 or less, if you have not owned a primary residence in the past 36 months, you will be eligible for an income tax refund of 10% of the purchase price up to $8,000.00.  For example, if you buy a home valued at $100,000.00 - you will be eligible for a tax refund of $8,000.00; if the house purchase price is $70,000.00, you would be eligible for a tax refund of $7,000.00.  You can file an amended income tax return for 2008 and your refund will be sent to you within 12-weeks.   Thus, if your car payoff is $8,000 or less, you could return the amount gifted to you to payoff your car loan!!  Make sense?

I wish you nothing but the very best, Dave.

Respectfully,
Brian Hahn
Loan Officer