Unrembursed expenses

[Anonymous]

My husband and I are trying to purchase a new home. We were given bad advice about writing off deductions. Will this hinder our qualifying process for a home purchase?

Max

[StartingOver10]

Do you mean you have deducted business expenses from your gross income and now there isn't enough income reported on your tax returns to show you can afford the mortgage?

[Anonymous]

Yes that is what the first LO stated. However, I went to another mortgage company and they said that their dti percentage rating is 50%. I made 71k and the amount deducted was 20k. I have 3 vehicle loans and that is the majority of my debt.

[Anonymous]

The same thing happened to me and I have been working on it for the last 2 years... I used to write off expenses but doing that lowers your usable income. You made 71k and deducted 20k that only gives you 51k of taxable income to use. I had to have 2 years of clean tax returns to actually use my whole income to purchase a home

[StartingOver10]

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@Anonymous wrote:

Yes that is what the first LO stated. However, I went to another mortgage company and they said that their dti percentage rating is 50%. I made 71k and the amount deducted was 20k. I have 3 vehicle loans and that is the majority of my debt.

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^^^Depending upon the amount of these vehicle loans, this could be a huge factor too. You have two items eating away at your income that can be used to purchase a home: reduction in your income + the vehcile loans. No question that taking $20k off the top of your income is a huge impact. Do you need all three vehicles?  One way to clear up enough funds to allow room for a mortgage is to sell one or more of your vehicles - or pay it off if it is near payoff and you have extra funds to do so without using your 'house' money. 

If you are getting a conventional loan, then a 50% ratio helps. And, as you pointed out, different lenders have different ratios they allow. 

Some people switch to FHA just because of factors like this. FHA guidelines allow up to 56.99% back end ratio.  The negative thing is that you then have MIP to pay and that hampers how much loan you can afford too. 

[VALoanMaster]

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@Anonymous wrote:
My husband and I are trying to purchase a new home. We were given bad advice about writing off deductions. Will this hinder our qualifying process for a home purchase?

Max

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Hi Max,

A couple of questions.

1) What type of loan are you applying for, FHA, VA or conventional? - FHA & VA are going to allow you the highest debt ratio where as a Fannie/Freddie loan will be maxed at 45%.

2) Are you self employed?
3) What deductions did you take? Mileage, depreciation?

4) Is more than 25% of your gross income from commissions?

The good & bad news is this, lenders don't always know or keep up on guidelines & guideline changes. You've already had 2 lenders give you their opinion so you really just need to get one more from another lender.

[Anonymous]

Hi, we are applying for a VA loan. Im a disabled veteran with 90% rating. VA is trying to push the loan through.
No! Im not self employed. I am a truck driver. I took mileage, and depreciation. However, i received a compensation summary from my job last week which I didn't include on my taxes. I am not sure if I need to amend my return. It shows the amount that I have paid in health insurance and union dues which was 22k.
I am paid by mileage so I m not sure if that counts as commission.
I thought about contacting freddie mac to get their advice.

[Anonymous]

Is it in my best interest to amend? Because we just received my husband's compensation summary from his job last week. We didnt file some of the wages on the return.
The vehicle was purchased for my son who just graduated college. Hopefully, we can put the car in his name. But I know that's a process within itself.

[VALoanMaster]

The good news is VA has essentially no lmit on the debt to income ratios so VA will be your best option. You just need a lender that knows the VA guidelines & doesn't have overlays.

[Anonymous]

We are waiting on a respond back from Veterans homes united