
January 31, 2013
FHA Loan Rules For Income: Interest, Trusts, and Dividend Payments
Part of the FHA loan approval process involves the lender verifying an applicants income. FHA rules state that for purposes of calculating a borrower’s debt-to-income ratio, only verifiable income can be counted in that ratio. Do FHA rules allow a borrower’s interest or dividend payments from investments to be counted as verifiable income? For some borrowers this can be an important question. According to HUD 4155.1 Chapter Four, “Interest and dividend income may be used for qualifying as long as tax returns or account statements support a two-year receipt history. This income must be averaged over two years.” Additional instructions to the lender for this issue include the requirement that when making the calculation, “The underwriter should subtract any funds derived from these sources that are required for the cash | more...