Income qualifications for a mortgage.

[Sunny_skies]

This is my first posting on this forum and I apologize ahead of time if this question has been answered somewhere else.

I am going to apply for a mortgage probably in late spring 2009. I have been doing as much as I can to bring my credit scores up. Already they have gone from the mid 500's in the summer to avg of 630 now. I have a bankruptcy from 8/05 but I believe from what I've read here on the forums that I'm far enough past that that it should not be problematic. It's been so great to watch those scores creep up!

My income is my issue right now. I am an RN and have worked continuously with no break in employment for the past 20 years. For most of those years I worked as a hospital staff nurse. However, for the past 2 and a half years I have worked as a travel nurse. The thing about travel nursing is that my rate of pay looks lower than what I made before but really is not.You see, a portion of my hourly rate is untaxed because the IRS allows a certain amount to be used for meals, incidentals, etc. Subsequently, my taxed portion is lower than what I used to make in the hospital but my total paycheck is more. I am concerned about this because I am afraid that it will affect the size of mortgage I'll be able to get. I actually just started a new permanent job last month here at home because I want to settle down here again (which is why I want to buy a house) and so I will no longer be doing the travel thing. But my income tax for this year which I will be filing soon will reflect the lower income.Will this be a problem?

One other thing off the subject if you don't mind my asking. I would like to refinance my car loan. I got it just after my bankruptcy so the monthly payment is pretty high. I would like to lower that payment now that good credit has been reestablished but insofar as I am looking to apply for a mortgage in the coming months I am not sure if even an inquire for that would be detrimental. On the other hand, the monthly payment for that vehicle may be detrimental to my DTI. Any help anyone can give here would be appreciated.

sunny_skies

[Anonymous]

As far as the BK, it would depend upon the reasons for it, the date it was filed, and what loan program you are going for to determine whether or not the BK will stop a house purchase.

Income will be a problem.  More than likely they will average your last 2 years income for DTI purposes, particularly with a recent move/job change.  There is no way to know for sure until the actual underwriter decides though.  But, can at times be hesitant to count the current paystubs on a new job if the past income reported tax income doesn't match it.

As far as the car loan, if you bought it in 05 or 06, I would focus on just gettting it paid off somehow prior to purchasing a house.  If the payoff on it is too high to figure a way to do this prior to purchasing, you can look into a refi.  If it is a newer model car this might work out OK.  If it was a few years old car when you bought it a few years ago, a refi might be difficult in this finance market.