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FHA and employment

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FHA and employment

Looking for some advice on a FHA loan. Mainly the employment portion of qualifying.

I was at my last job for 5 years as a Cosmetologist . I then had a business opportunity where essentially I am doing the same thing but managing an entire salon also.

Just so there was not a conflict I decided to leave my job after 5 years and rent a salon suite while we built a salon from the ground up.

In a nut shell I was employed for 5 years. Self Employed for a year and a half, and within the next month I will be on 100k salary a year.

Is this going to be a problem with being approved for a FHA loan in regards to employment ? I plan on applying for a mortgage in November.

Current middle mortgage score 756.

Average age 3 years 10 months
Oldest account 11 years 7 months
No lates or bad marks. Everything paid on time always.

House would be a new construction roughly 300k. Also checked my DTI with FHA guidelines and I am well within those.
Message 1 of 9
8 REPLIES 8
Valued Contributor

Re: FHA and employment

If you have paystubs from your new salary position you will be fine

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Message 2 of 9
Community Leader
Senior Contributor

Re: FHA and employment

Hi and welcome to MyFICO,

 

A few questions:

  • In 2017, was your income reported as W2 and did you file your taxes? What was your income?
  • In 2018, was your income reported as W2 and did you file your taxes? What was your income?
  • When did 1099 income start/end, what was income, and did you file taxes?
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Message 3 of 9
Valued Contributor

Re: FHA and employment

Is this W2 income from a business that you own ANY part of?
For instance my daughter is an LLC and pays herself by a normal payroll check. But she owns the LLC and would be considered Self Employed by all lenders standards.
Message 4 of 9
Regular Contributor

Re: FHA and employment

I believe you have to have at least 2 years woth of tax returns to prove your income when you are self employed....if your previous position earned enough income to qualify for the home then you should be fine...if not then that can be a problem when trying to qualify. 

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Message 5 of 9
New Visitor

Re: FHA and employment

17’ Income was as W2. Taxes filed, 45k income. ( 5 years employed here)

18’ I was a W2 employee until May 18’ at which point I left my employer to work for myself. 90k income, taxes filed. 25k came from w2 and the rest came from being self employed from May until the end of the year.

I am still currently self employed as of sep. 19’ . However starting October 1st, I will be starting as a W2 employee @ 100k a year salary.
Message 6 of 9
Established Contributor

Re: FHA and employment

You will be fine with 30 days paycheck stubs as the AUS (automated underwriting system) will require it. Hopefully you don't own any part of this new business, if you do, as long as you don't own more than 25% of the business we won't require business tax returns.

 

Your scenario is very common in my travels, but I can assure you, other LO's will struggle. So vet your LO and Lender wisely. It will make a difference in how smooth your transaction will go. 

 

Best wishes to you!

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 7 of 9
New Visitor

Re: FHA and employment

I do not own any part of the new business. Hopefully that makes things easier on me.


Message 8 of 9
Valued Contributor

Re: FHA and employment


@Jts7 wrote:
I do not own any part of the new business. Hopefully that makes things easier on me.



Yeah that will make it a lot easier. This should be an easy loan to close.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
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Message 9 of 9
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