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Late payments for new mortgage approval

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unknown438
New Member

Late payments for new mortgage approval

I am about to apply for a construction loan, and I noticed I have two late payments within the last 12 months on mortgage loans that do not report to the credit bureaus (foreign investment property loans).

 

I expect them to look at my bank statements so that they will notice them. One was paid 16 days late, and the other 23 days. 

 

How is that going to impact the application? Everything else is in excellent shape (fico 800, and dti, ltv way below max)

Message 1 of 8
7 REPLIES 7
pizzadude
Credit Mentor

Re: Late payments for new mortgage approval

These payments are both less than 30 days late correct?  If that's true then I don't believe you will have any issues as they wouldn't show on your reports anyway. 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 8
ShanetheMortgageMan
Super Contributor

Re: Late payments for new mortgage approval

@pizzadude is correct, payments that are less than 30 days late do not report to the credit bureaus nor does underwriting consider them as a late payment.  Only when they go 30+ days late will it impact the terms of the loan approval.

 

Since the debts don't report to the credit bureaus then you should be prepared to provide a copy of the most recent monthly billing statement, along with details on the real estate you own, including their property taxes & homeowner's insurance.  


Do report rental income for the foreign investment properties on your tax returns?

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Mortgage Loan Officer located in Southern California and lending in all 50 states
Message 3 of 8
unknown438
New Member

Re: Late payments for new mortgage approval

Thanks for the promising answer! Yes, I have to disclose foreign rental income as well as mortgage payments on my US tax returns. Although there is a treaty and it won't get taxed here, it needs to be reported to the IRS. 

Message 4 of 8
unknown438
New Member

Re: Late payments for new mortgage approval

@ShanetheMortgageMan on a different note, I do have a declining income on the W-2 side. I am self-employed and 100% owner of a C-corp. As we elect to become an S-corp this year, my CPA advised me to stop making bonus payments to lower my W2 income. This optimizes social security taxes, as you might know. How is this gonna be seen by U/W? The decline is significant, like 50%.  The business itself is stable and growing from a revenue and profit perspective. Can I qualify with just the C-corp profits?

Message 5 of 8
ShanetheMortgageMan
Super Contributor

Re: Late payments for new mortgage approval

The W-2 income from the corporation is calculated as part of the corporate income.  Underwriting might ask you for an explanation on why W-2 income is declining but that should be the extent of it.  Below is a spreadsheet where you can see how the income from the corporate tax return will be used to calculate your qualifying income from it.  So if you made $50k in W-2 corporate earnings in 2022 and $0 in 2023, but the corporation made $0 in 2022 and $50k in 2023, it'd be the same net income for both years.

 

Screenshot 2024-10-30 091523.jpg

 

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Mortgage Loan Officer located in Southern California and lending in all 50 states
Message 6 of 8
unknown438
New Member

Re: Late payments for new mortgage approval

Awesome @ShanetheMortgageMan and once that's calculated they simply build an average from the last two years? Even if it's declining? 

Message 7 of 8
ShanetheMortgageMan
Super Contributor

Re: Late payments for new mortgage approval

If the overall income is declining they'll just use the most recent year, not an average.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Mortgage Loan Officer located in Southern California and lending in all 50 states
Message 8 of 8
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