windfall down payment - red flag?

[Anonymous]

Hi,

I'm a newbee here. There's lots of great info and I would appreciate some  advice from the mortgage experts. I've never applied for a mortgage before, so sorry if these questions are very basic.

A little background 

I work as a tv producer/writer and have had a steady W2 gig for 13 years, plus I've always made money aside which I declare on a sched c. Usually, most of the schedule C money is a wash because I can find expenses related to most of it and the last few years I purchased production equip with it to increase my eventual profit margin.

Anyway, I've recently booked a lucrative job with will pay me 50K in a lump sum (total job is 75k). My hope is to put 35K of the initial payment down on a home (finally!) and keep the rest aside for taxes. The gig is from a private person, not another company. They've commissioned a documentary about their dad's life for his Birthday.

Here's the question (finally!). How will the bank perceive this sudden income when they review my loan ap? We had modest savings (8-9K) before. I ask because I've heard before that the bank wants to make sure that you get the down payment together yourself - don't take out a loan for it etc. What proof do I need to prove it's not a loan, but income? Will an invoice and contract with the client be enough?

On another note: Was just wondering if somebody could give me an idea of our chances to get a mortgage given our overall situation. We have good credit, but a lot of CC debt (in my wife's name).

Here's where we're at.

Combined income: adjusted gross 175K on our W2 (more on 1099 - but I showed a wash in previous years)

Just pulled my TU report: 720 - no derogs at all... 60 % rev credit available 

Wife: score 690-700: Never missed a payment on anything, just lots of CC debt she;s been paying down (20-30 percent available) No derogs at all. In her current job for 4 years.

Total monthly debt without housing is 2,500.00

Would like to put 5% down on a 420K house (assume we'd go FHA).

What are our chances? 

[DallasLoanGuy]

Underwriter will very cautious about 175k income last yr and zero the previous year. But if you can prove that the capital expenditures were a one tile deal, they may wive some lee way on calculating income.

A deal like this MUST be put together as a full file and presented to underwriter for opinion.

They will also scrutinize the large deposit.... especially when it comes from a private party. But if this is normal for how you do your business, then it may be ok.

Bottom line: Some questions cannot be answered by themselves. You should apply(it's free) and make darn sure that you get referred to a qualifty loan officer. If the loan officer can't sell this to the underwriter and it gets denied, it is hard for another underwriter to come along and override the previous denial.

Talk to a realtor, you need a well seasoned loan officer to help you with your deal.

[medicgrrl]

Your W-2 income does not count the $75k for the new contract, correct?  As far as using that for down payment, the underwriter will probably just want to make sure that you set aside enough for the taxes, as you have mentioned.  You shouldn't have any problems with using it.  Just save everything you receive pertaining to this such as the contract, copy of the check and deposit slip and any other documents you may receive.

[Anonymous]

thanks.

DLG, the 17K earnings is not just this year - that's off our W2s...that's been steady for years.

It's not uncommon that I take in 20-40K on my schedule C every year, but i usually find write-offs for most of it, so I'm not including it in my income when computing my DTI.

This just pertains to my down payment.

[Anonymous]

You should be OK on that as long as you can document it.  Also, I think as long as it has seasoned in your account for a couple months it usually works out anyways.  they want to see 2-3 months bank statements.