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Lender wont count disability income for home purchase in NV. 680 cs and can put 20% down. Options?

Are there loan options available, prefer a fixed mortage.  Looking to buy a home in the low 100s. 

  • December 15 2011 - Las Vegas
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Answers (8)

@Wayne's answer is accurate, and a more comprehensive explanation of the litmus test for using disability income.  However, if a company chooses to not use the LTD there is little you will be able to do to alter their decision.   VA and Social Security disability is another matter...the guidelines are very specific and lenders are pretty much across the board on how the income is calculated.  On the other hand, LTD agreements (such you have) are fairly individual and unique...so different lenders may evaluate the evidence differently...and be totally within the scope of their lending requirements.

I would get another lenders opinion.  Also, find someone who is experienced with VA loans.  VA guidelines do not technically have a debt to income ratio limit (lenders may have overlays, however).  The basic VA guides are very strict on residual income (monthly income after all bills are paid), but very flexible on DTI.  I closed a VA a few months back with 64% DTI...and have closed with DTI''s over 80%.  If all else fails, do the loan as a VA and use the LTD as a compensating factor.

Best of luck!
  • December 17 2011
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Unfortunately the required annual medical update creates a continuous income issue. I assume the reason for the medical update is to certify that your disability condition still exist. This would indicate that if not the company/ins. co  would not be liable to continue to pay the disability income. If income is guaranteed to continue for at least 3 yrs. then their would not be an issue.
  • December 17 2011
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" It is illegal for a lender to discriminate in terms of the source of income."

Wow, that's great news for meth lab owners and crack dealers; it seems they just became a protected class. Houses for everyone!
  • December 16 2011
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It is illegal for a lender to discriminate in terms of the source of income. If someone is telling you that they will not consider disability income as a legitimate source of income, then you have grounds to file a complaint.
  • December 16 2011
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Wow, if you were to Google "Perfect VA Mortgage Candidate" you may very well see a picture of yourself pop up. However, since you are putting 20% down, a conventional, conforming mortgage would most likely be your best bet and your LTD income should not be a problem. Are you sure the lender won't count the disability income or do you just have a loan officer that is a taco short of a combination plate?
  • December 15 2011
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thanks for the info.  I will check on the LTD question and will post asap, unless someone else beats me to it.  Stated loans are gone unfortunately, been gone for about 3 years or so :(
  • December 15 2011
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Profile picture for starj64
I have LTD from my previous employer (approved in 2009 and expires in 2031). Submitted letter to lenders underwriter and they wont consider. The LTD does require an annual medical update.  I also have VA Disabilty and Government retirement income but I need the LTD to meet the debt to income ratio.  I prefer a VA or FHA loan and maybe I need a different lender?  Are stated loans still an option?
  • December 15 2011
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You will have to have some level of qualifying income to get approved for a mortgage loan (regardless of down payment and credit scores).  Why won't the lender count the disability income? (assuming it's VA or Social Security Disability here, and not short-term disability income)  If the disability income is your only source of income, is it reasonable to assume the disability income will continue for at least the next 3 years? If it is, then you should be able to use the income for qualifying purposes.  If it's not likely to continue for the 3 years, then you will need another source of income, like an occupant co-borrower or a non-occupying co-signer (typically a relative).  

  • December 15 2011
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