FHA Home Loan Income Calculation
- Generally two years of employment history is required. Sometimes borrowers may have gaps in employment due to loss of job or illness or other reasons. This is a case by case scenario and can be handled if the reasons are authentic.
- Gross Income is traditionally averaged over last two years. However if a borrower is on salary the current salary can be used as income if this is based on growth achieved by the borrower. Similarly if a borrower is hourly and hourly wage has gone up the new hourly wage may be used if the Borrower is complete time and the hourly increase is based on growth achieved by the borrower.
- Bonus, Overtime, Other allowances are generally averaged over two years.
- Income from Part time jobs is permissible only if the borrower has been on the job for last 2 years.
- Incomes such as child sustain, social security, pension, disability, foster care etc will be included in the borrowers income if the income is expected to be received for next 2 years.
Only the modificated gross income ( after deducting all expenses) is considered. Generally some misconstrue this and try to use Gross Receipts. That is not permissible. Income after deducting expenses from gross receipts is considered. This basically is your taxable income from Business. However non cash charges like depreciation can be additional back to your taxable income, consequently increasing the borrowers income.
It is a must to have the business in operation for two years. Income will be averaged for two years.
Prospective Home Buyers should read articles on Loan Qualification for Home For Sale, FHA Home Loan, VA Mortgage Loans, USDA Home Loans and traditional Home Loans.
In addition prospective Home Buyers should read about specific cities, they are interested in, on the following aspects:
- Homes for sale for MLS Search,
- Bank REO / Short Sale Search
- Foreclosure Search (Outside MLS)
- Just Listed similarities
- Income similarities (1-4 units)
- Condo searches
- New Construction Homes