June 27, 2014
A reader asks, “My daughter is a schoolteacher. Where she lives, they do not give new hires full time jobs, but hire the teacher part time all the time so they do not have to give benefits. Can she get an FHA loan? Her total need would be $400,000 for the house less a 20% down payment, which she has. She has been working for a long time under this arrangement, but is not classified a a full time teacher. Her mother or I could co-sign for her if necessary. We are both retired but have verifiable incomes and property well in excess of the total loan amount.”
FHA loan rules permit co-signers, non-occupying co-borrowers and other arrangements, so the answer to this question where that is concerned is that technically yes, such an arrangement is permitted. However, the credit and income for all co-borrowers would be considered and it’s important to remember that FICO scores, loan repayment history and other financial qualifying factors would apply in these circumstances.
The larger-than-required down payment mentioned in the reader question would be considered as an additional compensating factor and may prove to be a big help.
It’s also good to remember that FHA loan rules do not include a minimum amount of income. Rather, the borrowers current debt is compared to the amount of income and calculations are made to see whether the borrower could afford the loan based on the verifiable income versus the amount of monthly debt. A co-borrower situation would improve changes of FHA loan approval assuming all borrowers qualify.
Cases where the borrower is employed part time may not count against the applicant, especially if there is a longer history of employment in the same job. This situation may not be a liability when it comes to FHA loan approval, but your experience may vary depending on the lender.
It’s best to discuss these options with a loan officer to get advice on what might be expected from that financial institution. Again, your experience may differ from one lender to another, so it’s best to shop around for a lender willing to work with you.
Do you have questions about the FHA home loan program? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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