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Answers (7)
- wayne lancaster, "funds2"
- Contributions:1175
Thanks AKA Chuck.... I added an r. Hopefully the county is with in a reasonable commute to his job.
Stephanie - It would be ideal if you could qualify on just your husband's income. The guideline for self employed income is one years tax return. There are circumstance where that may not apply i.e. if you are doing same type of work when employed with same clients. This would be a good time to locate a local loan officer to assist in getting pre approved. You can find loan officers in your area/state on Professionals tab above.
Stephanie - It would be ideal if you could qualify on just your husband's income. The guideline for self employed income is one years tax return. There are circumstance where that may not apply i.e. if you are doing same type of work when employed with same clients. This would be a good time to locate a local loan officer to assist in getting pre approved. You can find loan officers in your area/state on Professionals tab above.
- stefanielynn5
- Contributions:4
Howard - thanks for your reply. The new mortgage amount would be less than the 46.99% you mentioned so we would be ok there.
Our debt to income ratio is also under the 56.99% you mentioned and this is not including the rental income we receive.
Andrew - thanks for your reply as well. Our current home is not under an FHA loan so that should not be a problem.
Also, I did not consider our rental income when calculating our debt to income ratio because I figured it was not long enough.
Now, there is one more thing I wonder about that could pose an issue. My husband and I would be applying for the loan with him as the primary borrower. We have both had steady jobs for years so no problem in showing proof of income....except that I started my own business just 6 months ago and that is the only income I receive now.
How do lenders handle this? Will I just show my previous income (by tax returns or something) and my current income?
Thanks!
Our debt to income ratio is also under the 56.99% you mentioned and this is not including the rental income we receive.
Andrew - thanks for your reply as well. Our current home is not under an FHA loan so that should not be a problem.
Also, I did not consider our rental income when calculating our debt to income ratio because I figured it was not long enough.
Now, there is one more thing I wonder about that could pose an issue. My husband and I would be applying for the loan with him as the primary borrower. We have both had steady jobs for years so no problem in showing proof of income....except that I started my own business just 6 months ago and that is the only income I receive now.
How do lenders handle this? Will I just show my previous income (by tax returns or something) and my current income?
Thanks!
Wayne, she said County, not Country.
FHA should allow this.
From 4155.1 4.E.4.h Exceptions to the Exclusion of Rental Income From a Principal Residence Being Vacated by a Borrower.
"When a borrower vacates a principal residence in favor of another principal residence, the rental income, reduced by the appropriate vacancy factor as determined by the jurisdictional FHA HOC, may be considered in the underwriting analysis, under the circumstances listed in the table below.
The borrower is relocating with a new employer, or
being transferred by the current employer to an area
not within reasonable and locally-recognized
commuting distance.
A properly executed lease agreement (that is, a lease
signed by the borrower and the lessee) of at least
one year's duration after the loan is closed is
required.
Note: FHA recommends that underwriters also
obtain evidence of the security deposit and/or
evidence that the first month's rent was paid to the
lessee."
- wayne lancaster, "funds2"
- Contributions:1175
Another issue could be "moved to another country....". You and/or your family would need to occupy the home, so if your company has not moved you back to U.S. in area where home is located, there would be an issue getting an owner occupied FHA or conventional loan.
- Andrew Adams, "203K Specialist"
- Contributions:9349
Howard,
Couple other potential issues you did not address.
1. If Stefanie's current home is an FHA loan it is very possible that FHA financing will not be allowed. It will depend on how far apart the two houses are.
2. Stephanie will have to carry the debt load of the 2nd home. I do not believe that you will be able to offset the debts with rental history of only 8 months without at least 25% equity in the home.
Couple other potential issues you did not address.
1. If Stefanie's current home is an FHA loan it is very possible that FHA financing will not be allowed. It will depend on how far apart the two houses are.
2. Stephanie will have to carry the debt load of the 2nd home. I do not believe that you will be able to offset the debts with rental history of only 8 months without at least 25% equity in the home.
- Howard Vernick, "HowardVernick"
- Contributions:47
As long as you are purchasing the new home to live in as your primary residence you can finance it with an FHA insured loan.
Lenders look at two calculations when determining your qualifications. The first is your housing ratio where they compare your gross monthly income to your new mortgage payment including the taxes, insurances, and association fees. This ratio cannot exceed 46.99% of your income.
The second calculation is your debt to income ratio. This is where they compare your gross monthly income to your new housing payment plus all of your other debt, not including things like electricity, other insurances, etc., and this ratio cannot exceed 56.99% of your income.
Now these are the highest ratios possible and some lenders will not approve loans at these limits, so you will have to speak with different lenders in your area.
Good Luck with your search, and this can be done.
Lenders look at two calculations when determining your qualifications. The first is your housing ratio where they compare your gross monthly income to your new mortgage payment including the taxes, insurances, and association fees. This ratio cannot exceed 46.99% of your income.
The second calculation is your debt to income ratio. This is where they compare your gross monthly income to your new housing payment plus all of your other debt, not including things like electricity, other insurances, etc., and this ratio cannot exceed 56.99% of your income.
Now these are the highest ratios possible and some lenders will not approve loans at these limits, so you will have to speak with different lenders in your area.
Good Luck with your search, and this can be done.
FHA Loan for Second Home that will be our primary residence
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