Do you guys think I'll qualify for USDA?

[slappywhite]

So I'm looking into buying my first home using a USDA guaranteed loan.  I'll post some information and you guys tell me what you think.

Credit Scores

EQ- 718(myfico score)

TU- 712(myfico score)

EX-??

*No lates, collections, charge-offs, foreclosures, bankruptcies, etc.

I've been employed since November 2009 with the same business with an annual salary of $52K.  Before my current job, I worked in the same field at a different business making significantly less money because it was a part-time gig.  I still have this part-time gig (for 5 years now) which pays $9K annually for a total annual salary of $61K.   

I'm interested in a $200K house.  I currently pay $1450/month for the house I've rented for over a year.  I've played with a couple of online mortgage calculators which gives me a monthly payment of between $1200-$1300 per month.  This would put my front end DTI below the 29%, but my back end would be about 43% with my student loan debt and credit card payment, which is above the 41%.

So what do you guys think?  Any comments, suggestions, advice??

[ShanetheMortgageMan]

You should be fine.  The only thing that isn't 100% vanilla about your situation is the fact that you've had your full time employment for less than 2 years, but since it's been at least 6 months underwriting should accept it.  Some may say it's considered a job, and that requires 2 years to be at, but if you are indeed working full time, and are on salary (so commissions/overtime/bonuses aren't a significant part of your income) then in my opinion you should be OK

[slappywhite]

Thanks Shane....My employment being less than 2 years was my main concern.  Hopefully it won't be a cause for denial.  Thanks again!

[ShanetheMortgageMan]

Welcome.  Your situation is one a loan officer can ask the underwriting manager about before you make an offer, so you can have the extra assurance that your employment won't be an issue.

[slappywhite]

Ok, another question for you.  The business I work for is a non-profit organization.  I am the President/Managing Director of the organization.  Since a non-profit isn't "owned" by anyone, rather managed by our board of directors, who would the underwriter call to verify my employment?  Even though I am the President, certainly they would not call myself to verify.  My thoughts were the underwriter could call our Vice-President, but someone told me that they would not take verification from someone that works under me. How do you think they would go about verifying employment in this situation?

[ShanetheMortgageMan]

Do you own any percentage of the company?  Who cuts you your checks?

Do you have an HR or payroll department?  They normally are who verifies employment.

[slappywhite]

No, I do not own any percentage of the organization, no on does.  Our organization's operating budget comes from donations from outside sources.  It is one of my responsibilities as the managing director to handle the payroll, so there is no payroll department.  This is not a large organization such as United Way or Red Cross, we are a small organization with only a handful of employees.  I cut the checks on payday and also handle all of the IRS tax filings. It looks like this would be a tricky situation when it comes to verifying my employment. 

[ShanetheMortgageMan]

Even though you technically don't own it, what you are describing is sounding more and more like self-employment, as it sounds like it operates in a similar manner, so while you wouldn't have to provide tax returns on the organization (I believe many non-profits are tax exempt) underwriters may hold you to the 2-year employment requirement that self-employed borrowers have.  You'd definitely want to have your employment fully evaluated by an underwriter, so when seeking a pre-approval I believe your top priority should be making sure your loan officer has gotten the OK from the appropriate person on your situation (whether it is emailing documents back and forth to the underwriting manager, or having your entire file sent in for underwriting review).

[JM-AM]

---

@slappywhite wrote:

No, I do not own any percentage of the organization, no on does.  Our organization's operating budget comes from donations from outside sources.  It is one of my responsibilities as the managing director to handle the payroll, so there is no payroll department.  This is not a large organization such as United Way or Red Cross, we are a small organization with only a handful of employees.  I cut the checks on payday and also handle all of the IRS tax filings. It looks like this would be a tricky situation when it comes to verifying my employment. 

---

Just to throw in my 3 cents. At one time about 20 years ago I was the CEO director of a RED CROSS chapter. We were also self funded through donations but we all still had a salary. While I signed off payroll and did the finances it still was not an issue. I know things may be different now but from my experience then purchasing a home they just call into the business number you supply and confirm you are employed there. They did check it was a business related phone number, and the common financial information they required (Pay Stubs, Bank Statements, etc etc..). IMO I do not see any major problems, but as Shane has mentioned letting them know upfront may make the process go smoother. Good Luck

[slappywhite]

Lots of great information!  Thanks a bunch I really appreciate it.  If and when I decide to pull the trigger, I'll let you guys know how it turns out.  Thanks again!