FHA loan - not my first but first by myself and not sure what to expect with tax documents

[Mizsass]

Hi,

In 2008 my soon to be ex-husband and I were approved for an FHA loan on the home I currently live in, which is under contract to sell - pending inspection/appraisal.

I applied for a new FHA mortgage and am under contract for a new home. I've sent the lender all of the documents requested so far - letter from employer stating I'll remain employed in same role after moving to new state, W2s, bank statements, drivers license, signed contract and net sheet for my current house sale, etc. 

The loan officer sent me e-docs to sign including the 4506-T forms to pull 3 years of 1040's (2016, 2017, 2018). My main source of income is as a W2 employee of a business I have no ownership in (day job). I did have some schedule C losses the past couple of years due to some self-publishing work I was attempting as a side gig. I narrated some audiobooks, and have written 4 novels in two series I was gearing up to publish at the end of last year/beginning of this year). Unfortunately, due to a bad situation leading to getting divorced and some accidents I was personally injured in I didn't get enough done to have positive income from that endeavor. Now I'm worried this is going to cause me issues getting approved for my loan.

My DTI is around 35% (estimate) and I have plenty of assets for my downpayment/closing and reserves. My mid-score was 637 at the time it was pulled, I paid down a lot of my credit cards and got an old collection removed so it is continuing to rise. 

How worried should I be? I'm hard wired as a major worrier with high anxiety anyway. 

[Mortgage-Specialist]

You mentioned you have low debt ratio, large amount of assets and you've already been pre approved. 

What would you be worrying about? 

[Mizsass]

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@Mortgage-Specialist wrote:

You mentioned you have low debt ratio, large amount of assets and you've already been pre approved. 

What would you be worrying about? 

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I don't even know! I've just had such a bad past year and selling our house has been stressful, I guess I'm just letting anxiety get the best of me. My loan moved to undewriting today and I have plenty of time to close so will see what happens. It's kind of scary and empowering all at once doing this all by myself. 

[VALoanMaster]

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@Mizsass wrote:

Hi,

In 2008 my soon to be ex-husband and I were approved for an FHA loan on the home I currently live in, which is under contract to sell - pending inspection/appraisal.

I applied for a new FHA mortgage and am under contract for a new home. I've sent the lender all of the documents requested so far - letter from employer stating I'll remain employed in same role after moving to new state, W2s, bank statements, drivers license, signed contract and net sheet for my current house sale, etc. 

The loan officer sent me e-docs to sign including the 4506-T forms to pull 3 years of 1040's (2016, 2017, 2018). My main source of income is as a W2 employee of a business I have no ownership in (day job). I did have some schedule C losses the past couple of years due to some self-publishing work I was attempting as a side gig. I narrated some audiobooks, and have written 4 novels in two series I was gearing up to publish at the end of last year/beginning of this year). Unfortunately, due to a bad situation leading to getting divorced and some accidents I was personally injured in I didn't get enough done to have positive income from that endeavor. Now I'm worried this is going to cause me issues getting approved for my loan.

My DTI is around 35% (estimate) and I have plenty of assets for my downpayment/closing and reserves. My mid-score was 637 at the time it was pulled, I paid down a lot of my credit cards and got an old collection removed so it is continuing to rise. 

How worried should I be? I'm hard wired as a major worrier with high anxiety anyway. 

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Hi Mizsass,

How much did you claim in schedule C losses on your taxes? Those losses can reduce the amount of W-2 income a lender can use so you're right to be concerned about it.

The good news is not all lenders will require tax returns/transcripts for the last 2 years let alone 3 years! I just saved a deal for a builder due to the same issue. 

[Mizsass]

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@VALoanMaster wrote:

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@Mizsass wrote:

Hi,

In 2008 my soon to be ex-husband and I were approved for an FHA loan on the home I currently live in, which is under contract to sell - pending inspection/appraisal.

I applied for a new FHA mortgage and am under contract for a new home. I've sent the lender all of the documents requested so far - letter from employer stating I'll remain employed in same role after moving to new state, W2s, bank statements, drivers license, signed contract and net sheet for my current house sale, etc. 

The loan officer sent me e-docs to sign including the 4506-T forms to pull 3 years of 1040's (2016, 2017, 2018). My main source of income is as a W2 employee of a business I have no ownership in (day job). I did have some schedule C losses the past couple of years due to some self-publishing work I was attempting as a side gig. I narrated some audiobooks, and have written 4 novels in two series I was gearing up to publish at the end of last year/beginning of this year). Unfortunately, due to a bad situation leading to getting divorced and some accidents I was personally injured in I didn't get enough done to have positive income from that endeavor. Now I'm worried this is going to cause me issues getting approved for my loan.

My DTI is around 35% (estimate) and I have plenty of assets for my downpayment/closing and reserves. My mid-score was 637 at the time it was pulled, I paid down a lot of my credit cards and got an old collection removed so it is continuing to rise. 

How worried should I be? I'm hard wired as a major worrier with high anxiety anyway. 

---

Hi Mizsass,

How much did you claim in schedule C losses on your taxes? Those losses can reduce the amount of W-2 income a lender can use so you're right to be concerned about it.

The good news is not all lenders will require tax returns/transcripts for the last 2 years let alone 3 years! I just saved a deal for a builder due to the same issue. 

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The first year it was $5k, I had some investment, conf fee and professional organization fees, second year $3k for various expenses (conference fees, professional org fees, etc). For my application I only claimed my base salary of 120k and that's what my DTI was calculated off of, but my W2's will show that I get an annual bonus of 20% every year, which my loan officer is aware of. So I think it will be okay, I just was reading other posts about it and had a moment of panic. I do have time to change lenders if necessary. Thank you for the input. 

[Mizsass]

As usual, all my anxiety and worry was for naught, I got my mortgage approval and just had to submit a few LOE's for things related to HOA dues and a couple of letters from my soon to be ex-husband on some things. Thank you everyone for the replies! Appreciate this board and forums, it really helped me through purchasing my first home 11 years ago and now again!  

[donkort]

Excellent!