topic Re: FHA loan question in Mortgage Loans

FHA loan question

vizon — Fri, 25 Jan 2013 22:03:08 GMT

Hey guys, I have been living in an apartment that is so expensive and draining, for a comparable home I would save over $500 even after utilities!

The issue is my income isn't provable. MY credit score is a little lower than 700 which I expect to get better by march (several new accounts including a car loan will age 1yr). IT will be around 690-700 at that time. I want to get an FHA loan. My dad on the other hand has the money but not the credit worthyness (he makes approx $200,000+).

My dad said he may have a tax liens as well. I own a business and in my office building an appriasal company owner and I had talked about this. He called his dad who has been a loan officer for decades and his dad thinks I can get an FHA loan with my dad cosigning.

He said he knows for a fact he saw a similar situation a year and a half ago, they used the primary (occupant) persons credit and a cosigner (non-occupant) for income. The co-signer wouldn't be living in the property, so they wouldn't be on the deed, meaning the co-signer's obligations would not become my own.

I have no negative credit history except for a 3 year old 30 day late (total mistake). My credit util is probably 20% and decreasing.

If you all have more insight, I would love to know before I get too excited. $500 a month more in savings would be lovely!

Re: FHA loan question

MovingForward_2012 — Fri, 25 Jan 2013 22:32:06 GMT

I haven't heard what your saying to be true. As far as I know for FHA loans and any loan for that matter, the cosigner also has to meet the minimum credit score requirement for the loan, as well as the applicant, in order for the cosigner's income to qualify you for more house.

I'll let others chime in their thoughts.

Re: FHA loan question

violetsmom — Fri, 25 Jan 2013 22:40:18 GMT

As far as I know, anyone applying for a mortgage loan will need to have proper credit. No way around it.

Re: FHA loan question

OilFieldEngineer — Fri, 25 Jan 2013 23:44:37 GMT

Also they take the lowest middle score out of your's and the co-signer's and I believe they require 640 but some will go 620. I encountered a similar situation my girlfriend and I are not married but have shared an apartment for 2.5 years. When we applied for the mortgage on the home alot of her old charge offs and late pays have her score below minimum required. We were able to do the loan in just my name but that also meant that I could not use her income so all that happened was we were limitted from 500k pre-approval to 350k.

I would try to see if you can qualify for FHA if you can provide bank statements and profit and loss statements for the business they may allow the income. Check with a broker and have them pull your credit. If anything you will get more direction and know what sort of steps to take and hurdles you will have.

I can definately understand the savings from an apartment to a home. We pay 2450 a month in rent for our 3 bedroom apartment and for a 290k house with escrow for tax and insurance the payment is only 2250.

Re: FHA loan question

StartingOver10 — Sat, 26 Jan 2013 02:15:10 GMT

1) Yes, you can have a non-occupant co-borrower for an FHA loan.

2) However, as pointed out, he has to qualify for the loan too. His tax liens are a problem, unless he has been making payments on them and can show at least 6 months of on time payments.

3) Can't you prove your income via your tax returns? Or has your accountant been too aggressive?

4) Your father can gift you a large lump sum and you can go to a company like TrustCo that handles portfolio loans for these type of situations. TrustCo is a regional bank. The loan is a conventional loan and not sold on the secondary market. The rate is a good rate too, but the residence has to be a primary (like you want it to be).

Good luck.

Re: FHA loan question

JM-AM — Sat, 26 Jan 2013 03:17:35 GMT

StartingOver10 wrote:
1) Yes, you can have a non-occupant co-borrower for an FHA loan.

2) However, as pointed out, he has to qualify for the loan too. His tax liens are a problem, unless he has been making payments on them and can show at least 6 months of on time payments.

3) Can't you prove your income via your tax returns? Or has your accountant been too aggressive?

4) Your father can gift you a large lump sum and you can go to a company like TrustCo that handles portfolio loans for these type of situations. TrustCo is a regional bank. The loan is a conventional loan and not sold on the secondary market. The rate is a good rate too, but the residence has to be a primary (like you want it to be).

Good luck.

Im thinking the problem with the income is it is not provable at all. Possibly cash type of business. Possibly no income at all and seeing what is possible to be done.

Number 4 is an excellent choice, or you can just have your father buy the house cash and you pay him back.

Re: FHA loan question

vizon — Sat, 26 Jan 2013 03:40:53 GMT

Lets put it this way, if my dad was financially responsible, he wouldn't have tax liens or bad credit. That's not an option. I can prove my income via bank records but I can show a loss tax wise.

Re: FHA loan question

vizon — Sat, 26 Jan 2013 04:15:34 GMT

StartingOver10 wrote:
1) Yes, you can have a non-occupant co-borrower for an FHA loan.

2) However, as pointed out, he has to qualify for the loan too. His tax liens are a problem, unless he has been making payments on them and can show at least 6 months of on time payments.

3) Can't you prove your income via your tax returns? Or has your accountant been too aggressive?

4) Your father can gift you a large lump sum and you can go to a company like TrustCo that handles portfolio loans for these type of situations. TrustCo is a regional bank. The loan is a conventional loan and not sold on the secondary market. The rate is a good rate too, but the residence has to be a primary (like you want it to be).

Good luck.

Also, to number one - there is a difference between a co-borrower, and cosigner. A coborrower is on the deed, the cosigner is not. FHA allows both.

Re: FHA loan question

OilFieldEngineer — Sat, 26 Jan 2013 04:56:36 GMT

You still may be ok I have a side business consulting in my profession and frequently have my accountant "flip the magic swith" to show great losses on the business based on its own expenses which are nothing more than my own to take a loss carry forward from the subchapter S corporation in short I have in the last two year 2010, 2011 income that is either zero or negative on my tax return.

The loan officer and underwriter is using my bank records and W2 earnings from my primary job for my income because they said I have compensating factors such as assets and reserves. A loan is possible but it is based on other factors.

I still think you can do it on your own part of what they will consider is what you apartment rent is currently. That was also reviewed with mine and if you have never been late the underwriter will consider that information as a track record for basis of repayment. At least this is what they are doing on mine.

My loan is currently still in underwriting they asked for two conditions which I satisfied already and I am hoping for a clear to close (fingers crossed).

Re: FHA loan question

JM-AM — Sat, 26 Jan 2013 05:27:32 GMT

OilFieldEngineer wrote:
You still may be ok I have a side business consulting in my profession and frequently have my accountant "flip the magic swith" to show great losses on the business based on its own expenses which are nothing more than my own to take a loss carry forward from the subchapter S corporation in short I have in the last two year 2010, 2011 income that is either zero or negative on my tax return.

The loan officer and underwriter is using my bank records and W2 earnings from my primary job for my income because they said I have compensating factors such as assets and reserves. A loan is possible but it is based on other factors.

I still think you can do it on your own part of what they will consider is what you apartment rent is currently. That was also reviewed with mine and if you have never been late the underwriter will consider that information as a track record for basis of repayment. At least this is what they are doing on mine.

My loan is currently still in underwriting they asked for two conditions which I satisfied already and I am hoping for a clear to close (fingers crossed).

You still have positive income reporting. The OP has no positive income reporting.

Re: FHA loan question

JM-AM — Sat, 26 Jan 2013 05:39:27 GMT

vizon wrote:
StartingOver10 wrote:
1) Yes, you can have a non-occupant co-borrower for an FHA loan.

2) However, as pointed out, he has to qualify for the loan too. His tax liens are a problem, unless he has been making payments on them and can show at least 6 months of on time payments.

3) Can't you prove your income via your tax returns? Or has your accountant been too aggressive?

4) Your father can gift you a large lump sum and you can go to a company like TrustCo that handles portfolio loans for these type of situations. TrustCo is a regional bank. The loan is a conventional loan and not sold on the secondary market. The rate is a good rate too, but the residence has to be a primary (like you want it to be).

Good luck.
Also, to number one - there is a difference between a co-borrower, and cosigner. A coborrower is on the deed, the cosigner is not. FHA allows both.

I havent done a loan in several years where the lender would allow a cosignor.

If you are on the application you can almost bet the house you are a co-borrower.

What FHA says and what the Lenders say are a whole different story.

Just think of scores as an example, while one Lender will accept a 580 minimum FICO credit score, and other Lenders a 620, and most 640, while some are even at 660, FHA score requirements are even much lower. FHA allows lower scores, but trying to be approved with a lower score in todays market is non existent.

Another Clarification, just because you are Co-Borrowing on a home loan does not mean you are on the Deed. Any one can be added to a Deed, or not added to a Deed.

Re: FHA loan question

vizon — Sat, 26 Jan 2013 07:49:43 GMT

JM-AM wrote:
vizon wrote:
StartingOver10 wrote:
1) Yes, you can have a non-occupant co-borrower for an FHA loan.

2) However, as pointed out, he has to qualify for the loan too. His tax liens are a problem, unless he has been making payments on them and can show at least 6 months of on time payments.

3) Can't you prove your income via your tax returns? Or has your accountant been too aggressive?

4) Your father can gift you a large lump sum and you can go to a company like TrustCo that handles portfolio loans for these type of situations. TrustCo is a regional bank. The loan is a conventional loan and not sold on the secondary market. The rate is a good rate too, but the residence has to be a primary (like you want it to be).

Good luck.
Also, to number one - there is a difference between a co-borrower, and cosigner. A coborrower is on the deed, the cosigner is not. FHA allows both.
I havent done a loan in several years where the lender would allow a cosignor.
If you are on the application you can almost bet the house you are a co-borrower.

What FHA says and what the Lenders say are a whole different story.

Just think of scores as an example, while one Lender will accept a 580 minimum FICO credit score, and other Lenders a 620, and most 640, while some are even at 660, FHA score requirements are even much lower. FHA allows lower scores, but trying to be approved with a lower score in todays market is non existent.

Another Clarification, just because you are Co-Borrowing on a home loan does not mean you are on the Deed. Any one can be added to a Deed, or not added to a Deed.

I can honestly say I am not very versed on the subject but this is something I have looked into with great detail with the 2 agents in my office, LO and online... A co-borrower must be a live in person, while a co-signer is someone that does not live on the property. The co-borrower is on the deed, while the co-signer is not. I've literally read this on every website I've researched and that is what I was told prior to even looking into it. (I know FHA has the rules of how long you must live at the property without renting and what-not.)

Re: FHA loan question

MovingForward_2012 — Sat, 26 Jan 2013 08:40:48 GMT

I am not so sure about the cosigner thing you mention is possible with an FHA loan. On my FHA loan application, the additional signature blocks are for the co-borrower. There is no such thing as a co-signer option on my application. I don't know if they use different forms based on the situation, but the application looked pretty generic to me.

Re: FHA loan question

vizon — Sat, 26 Jan 2013 08:59:27 GMT

They are two different things. http://portal.hud.gov/hudportal/documents/huddoc?id=4155-1_4_secA.pdf

Re: FHA loan question

Mike_B03 — Sat, 26 Jan 2013 09:07:59 GMT

Co-signer...co-borrower, doesn't really matter what they are called, bottom line is that they also need to meet the minimum qualifying credit score.

Re: FHA loan question

MovingForward_2012 — Sat, 26 Jan 2013 09:23:25 GMT

Yes. I'm not sure if the term co-signer and co-borrower are interchangeable with different responsibilities for each but as Mike said, the requirements are the same as for the primary borrower.

On my actual loan app, there is one blank spot for the co-borrower, which is usually the husband or wife. The word "co-signer" is not mentioned anywhere on the document.

Re: FHA loan question

OilFieldEngineer — Sat, 26 Jan 2013 09:37:33 GMT

Actually I did not show positive income for the two years previous they are looking at an average income via bank statements as they could see capital purchases such as vehicles being purchased for the corporation. They see there is income and assets but the loss which the accountant helps you make sure will show on the business is then written off as a loss carry forward for the shareholder to reduce the adjusted gross income. They stated that without the large reserves and assets they would have rejected my loan so yes a loan with showing losses on tax returns can be done but it is not an easy process only way to know is to try.

And who knows I am not through underwriting yet so they still could shoot me down you never can tell but I got my first round of conditions and satisfied all so we will just have to see what the underwriter comes back with.

Re: FHA loan question

StartingOver10 — Sat, 26 Jan 2013 14:14:03 GMT

Vizon, if you need a lender that will do a non-occupant co-borrower for your FHA loan, PM me and I will send you the name and the number of a great LO.

Re: FHA loan question

vizon — Sat, 26 Jan 2013 21:31:47 GMT

StartingOver10 wrote:
Vizon, if you need a lender that will do a non-occupant co-borrower for your FHA loan, PM me and I will send you the name and the number of a great LO.

Ok, going to PM you! Thanks

Re: FHA loan question

StartingOver10 — Sat, 26 Jan 2013 22:53:41 GMT

PM sent.