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Non-wage deposits & explanations. Advice please!

Hi everybody! So I have some questions. My husband and I have been pre-approved for a USDA loan. Found a house this past Monday, made an offer on Tuesday, and it was accepted Tuesday evening. Home inspection will be next week and appraisal after that. Here's my question. I've been reading up on what we will need to have for official loan approval so that we are prepared and sort of know what to expect. My biggest concern is bank statements. I'm a full time hair stylist who does close friends and families hair in my free time. I'm also do photography as a hobby. Money that I make from these things, I have deposited into my checking account. My loan officer said that they want explanations on large non-wage deposits. Sooo I'm really nervous. I don't deposit enough for it to be claimed as another income for the year, but I'm wondering if they will accept a written explanation of my "side jobs", since I have no  REAL physical proof that this is where that money has came from. I was told not to worry and just to be honest about the origination of the money, but I'm that kind of person that needs peace of mind through reassurance! Ha! Any input will help! Thanks. :-)

  • November 08 2012 - US
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Answers (3)

Profile picture for Gabilan Properties
It sounds to me like you are a self employed person. You should be filing a schedule C on your tax returns claiming this income and writing off your expenses. The business will have a bottom line profit or loss.

To qualify for a mortgage loan you will need 2 years schedule C profit that will go towards your qualifying ratios.

If you have not filed schedule C showing a profit, it is not likely the lender will approve your loan based on your earnings.

If your husband shows enough income without yours, the lender will approve the loan.

Good luck.
  • November 08 2012
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If you are doing a USDA loan the lender will look at the entire "household income" to make sure you are under the median income limit for your county.  If you write a letter stating this is income for you then they will have to take that into consideration and may disqualify you from getting the loan.  Either way you will need to document them and have your LO check your total income against the county limit.  I hope this helps.

  • November 08 2012
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Profile picture for user5894032
Well good news is I know for sure that we wouldn't have to worry about being disqualified for too much income! It's not an astronomical amount of money that I have coming in. I'm just wondering if they will accept written explanations of where each deposit came from. And some of it is not even an "income". My mother and brother are on my phone line and she gives me 140 a month, and we have close friends that live across from us in our apartment that give us money towards our internet bill because they use access. It's looking like all I can do is give detailed explanations and sit tight! I would think that they would take into consideration that I am a hairstylist, and more often than not stylists are going to have cash deposits since we offer a service and a lot do hair outside of their full time job. Like I said before though, it's not nearly enough to claim as an income. 
  • November 09 2012
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