My cousin and her husband are looking into building a home for around 300k in Ohio. 4 bedrooms and 3 baths in a nice suburban neighborhood. She is a stay at home mom of three kids, and he works in engineering making about 70k a year. With the income alone I don't think they could afford it, but anyways she thinks they can. They have 40k in credit card debt and 80k in student loans, and no car payments. They just sold their current home, and paid off the car with that money. They are now living in a nice apartment community until they can build their house. She said they have about 10k in savings, but they do not want to put that down and keep it for emergencies. She said she believes with a new construction loan, she won't need to put anything down and can even consolidate her credit cards into the loan. I think she is nuts.
Maybe I am old school, I thought you could only get approved up to around 2.5 times your income less debt. 70k times 2.5 - the 80k and 40k is a 55k house. I don't know much about new construction or if the rules changed. What do you guys think?
