FHA question regarding income

trc1962 · ‎12-20-2014

Just about ready to make an FHA application and have gotten my credit almost to where it needs to be. My question is on income, or low income. I sold my home 18 months ago and put a lot of money in the bank (over 50k) and I relocated to an area with more opportunities for employment. I am a teacher and have spent the last year and a half subbing to get my foot in the district door. This has meant earning a lower salary (24K) but it won't stay that way as I will be a contracted teacher again in the next year or so. I am wanting to buy a home now and I have the stash of money in the bank and I wonder if that will work for now? I would be willing to set a bunch aside in a trust that would ensure payment. Will that work, or will they simply say my salary is too low?

ezdriver · ‎12-20-2014

Lenders are interested in ongoing income ... not just cash assets. That said, income from investments are counted along with employment income.

Anonymous · ‎12-20-2014

Don't you need 3 years in between home ownership to get an FHA loan? By that time you very well may have a new teaching job with increased salary and showing continual employment in your field (even with subbing). Am I missing something?

StartingOver10 · ‎12-20-2014

@Anonymous wrote:
Don't you need 3 years in between home ownership to get an FHA loan? By that time you very well may have a new teaching job with increased salary and showing continual employment in your field (even with subbing). Am I missing something?

^^^No. You can sell your current home with FHA mortgage and get a new FHA mortgage immediately on the next purchase. Or even refinance the existing FHA with another one.

Most people would try to get a conventional loan for the new purchase but there are times where an FHA loan works better for the borrowers qualifications.

Anonymous · ‎12-20-2014

StartingOver10 wrote
^^^No. You can sell your current home with FHA mortgage and get a new FHA mortgage immediately on the next purchase. Or even refinance the existing FHA with another one.

Most people would try to get a conventional loan for the new purchase but there are times where an FHA loan works better for the borrowers qualifications.

Thank you for the information, I was just researching it myself. I was confusing it with First Time Home Owners.

DallasLoanGuy · ‎12-20-2014

you will need to wait until you are full time employed unless the 24k is enough to qualify.

and i doube we could use the 24k anyway. it is temporary and likely to fluctuate so we would want to see 2yrs history. we would treat it like commission basically

Retired Lender

trc1962 · ‎12-20-2014

The home I sold was not an FHA mortgaged home, but a conventional one. I am not a new teacher either and have been teaching for 25 years and my current job is contracted, albeit still considered a "substitute situation. I am just surprised that the money sitting in an account at the bank counts for nothing. I could ask my brother to cosign if that would be helpful with the income part, but I don't want to if I can get it done without.

StartingOver10 · ‎12-21-2014

@trc1962 wrote:
The home I sold was not an FHA mortgaged home, but a conventional one. I am not a new teacher either and have been teaching for 25 years and my current job is contracted, albeit still considered a "substitute situation. I am just surprised that the money sitting in an account at the bank counts for nothing. I could ask my brother to cosign if that would be helpful with the income part, but I don't want to if I can get it done without.

Oh the money definitely counts. It is a compensating factor. Also I have found that the more you put down, the guidelines get a little bit easier.

For example, if you put down slightly more than 10% on an FHA loan rather than the 3.5% you will see that you can get away with higher ratio's and the mortgage insurance will be removed after 11 years.

Explore your options with a loan officer and ask him what the compensating factors are for FHA.

StartingOver10 · ‎12-21-2014

I found a website that has a good list of normal compensating factors for FHA. It says its for Massachusetts but it really is the same everywhere IME. Take a look at this link for details http://www.massmortgagebuddy.com/2013/05/using-compensating-factors-to-beef-up-your-fha-application/

trc1962 · ‎12-21-2014

Thanks for the great info and I am going to check out the website for compensating factors right now. I sure get a lot of good information from this site I can't find elsewhere!