Hi I am new here to the boards...........We are applying for a UDSA mortgage loan for a house that is being built. The loan is currently with our underwriter and has been for about 2 weeks and out of the blue today she is saying that we may not qualify for this type of loan because we make to much money. To make a long story short we are moving to another part of the state and my husband just started his new job. I recently quit my job and will now be a stay at home mom. I wrote a letter to our LO stating when my last day of work was and that I planned to stay home at least until my youngest starts school (about 1 year from now). Well our LO/underwriter included my possible future income that I *could* be making when I go back to work in one year as current income to disqualify us for the loan based of my previous jobs income! So basically she said with just my husband working we would have no problem getting the loan......but how in the world can they count *possible future* income!?! Can they do that ?
In short yes we did.....but our combined yearly income is within 1,000 dollars of what he is making at his new job (pay increase for him which allows me to stay at home). So at the time we started our loan process I had to write a letter stating that I was leaving my job and when my last day was and I *may* try to find work again in the new city in a year or so when the youngest child starts school. I just didn't think they could use that possible income in the future against us. Maybe I shouldn't have even put that I may possibly return to work in a year?!?
You used your actual current income to qualify for the amount - but don't want them to use your "possible" future income once moved. BUT you want them to use your DH's "possible" future income to stay qualified.
Did you use his future higher salary along with your current salary to qualify? Would he have qualified alone with just his salary? That's probably the way you should have gone... Only use his... or not have counted on the pay raise and the fact that once moved that you would quit work for a year - qualify with the current incomes and then once the loan had closed and his pay was as expected after the move, then you could have taken the sabbatical without issue.
To qualify for the loan we used our previous combined monthly income which is about the same he alone is making at his new job. We also had his new employer send in a letter saying how much his monthly salary is set at. So now that I have left my job and he is working at his new one is it advisable to start the loan process all over again with a new lender? Our current loan has not been sent to USDA yet and has been with the UW for over two weeks now. I just wish my LO would have said something sooner instead of dragging us along after numerous e-mails asking about the status of the loan, and recieving the typical answer "I'll look into it."
So essentially they are figuring in that I *possibly* could return to work in a year or so as income to disqualify us, even though we are making about the same now as when we first started the loan process and both working at our previous jobs. I really have no intentions to return to work and plan to stay home with the kids, and let him be the bread winner when before we both contributed about equally to the finances. Should we go to another lender before they send it to the USDA and have me write another letter stating I will be a SAHM with no intentions to go back to work? I was just trying to be honest and say that I might go back to work in a year but nothing is set in stone.
Update: Just spoke with a represenative from the USDA guareented loan office and he basically said that my LO and underwriter are misinformed. He said that they do NOT include possilbe future income that wouldn't even be made until over a year from now (when the youngest starts school and thats even if I go back to work) as current income to disqualify us from the loan. He said its along the same line as someone walking into his office and saying,"Well in one year from now I possibly could be making 300,000 a year so you can go ahead and give a loan for that million dollar house." He said that they only go by current income and in that case we would qualify. I think I will be searching for a new lender!
There is a big difference between "qualifying" income and "eligible" income. Your income need to be within the eligible income limits, if it is not, then you are not eligible for a USDA loan. If you are talking to people about the qualifying income amount, then you are not discussing if you are eligible for USDA, you are only talking about the amount of income used to qualify for the loan amount you are seeking.
Someone can have an eligible income amount, but still not have a qualifying income amount for the loan amount they are seeking.
Someone can not have qualifying income if their income makes them ineligible, because if they are ineligible it doesn't even get to the qualifying part of it.
USDA considers projected income in the eligible income calculation - for example if someone is planning on returning to work, then that income will likely be included in the eligible income calculation. There is actually a form that we have our clients have to sign that indicates all family members living in the home, if any of them are employed/making income, or if anyone is planning on returning to work - if so then we need to analyze the information and if determined, then also include it in the eligible income calculation.
Thanks Shane for your post!!! Sorry I since I am new to this whole process I guess I should say that our income is eligible for the guareented USDA loan and that our lenders underwriter said that we should have no problem qualifying for the loan amount we are asking for. The only catch is that they are calculating that I may go back to work in a year (which I honestly doubt it, and even if I did it would be very part-time work so less than what I was making previously). When they calculate possible future income from my previous 2010 W2 they say we would be over the limit by $5,000. Should I rewrite a letter stating that I have NO intensions of going back to work? Or should I stop the process and find a new lender? I just don't want this blip to disqualify us.