USDA loans and tip income

[ShanetheMortgageMan]

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@liandur wrote:

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@ShanetheMortgageMan wrote:

Tip income is averaged over a 24 month period - and unless it is reflected on your paystubs, it is based on the amount of tips claimed on your tax returns.

Are the tips reflected on your paystubs?  Did you work in the casino/make tips in 2009?

Whatever your income comes out to be may or may not be enough to qualify for what you are looking to buy, the price of the home would be needed as well as whatever other monthly debt payments you are obligated to pay.

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I realize this is an old post---I have been reading through doing some research for myself. I am a tipped employee as well and was wondering---if last year my taxes (I have to file a form 4137 to claim tips) state my income as $20,000 but this year it will be around $28000 would that difference cause a problem? Is taking an average the standard and it would not be an issue or would the difference in the 2 yrs raise a flag. I have a mid FICO of around 740 and am looking in the $80000 price range with a 10% down payment. No negatives anywhere on my credit----I am just concerned about my income as I know what I am looking at puts my PTI around 32-33% and DTI around 40%.

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When your income is increasing, then using a 2-year average is standard.  However it's a 24-month average, it won't be an average of what you are expected to make this year (2013) and averaging it in with 2012.  It'll be 2013 YTD + 2012 + however many months in 2011 that would equal 24 months.

Your credit & down payment seem good.  If your $20k/year of income qualifies then an average of $20k & $28k shouldn't have a problem.

[liandur]

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@ShanetheMortgageMan wrote:

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@liandur wrote:

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@ShanetheMortgageMan wrote:

Tip income is averaged over a 24 month period - and unless it is reflected on your paystubs, it is based on the amount of tips claimed on your tax returns.

Are the tips reflected on your paystubs?  Did you work in the casino/make tips in 2009?

Whatever your income comes out to be may or may not be enough to qualify for what you are looking to buy, the price of the home would be needed as well as whatever other monthly debt payments you are obligated to pay.

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I realize this is an old post---I have been reading through doing some research for myself. I am a tipped employee as well and was wondering---if last year my taxes (I have to file a form 4137 to claim tips) state my income as $20,000 but this year it will be around $28000 would that difference cause a problem? Is taking an average the standard and it would not be an issue or would the difference in the 2 yrs raise a flag. I have a mid FICO of around 740 and am looking in the $80000 price range with a 10% down payment. No negatives anywhere on my credit----I am just concerned about my income as I know what I am looking at puts my PTI around 32-33% and DTI around 40%.

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When your income is increasing, then using a 2-year average is standard.  However it's a 24-month average, it won't be an average of what you are expected to make this year (2013) and averaging it in with 2012.  It'll be 2013 YTD + 2012 + however many months in 2011 that would equal 24 months.

Your credit & down payment seem good.  If your $20k/year of income qualifies then an average of $20k & $28k shouldn't have a problem.

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Thanks for your response...I spoke with my employer and have found a way for all of my tips to be documented on my W-2's this year. Does this make a difference? Or will I be required to take an average of 2 years just based on my occupation?