Here is a common variation on an FHA loan question we get frequently. “I have been employed for about two years, do I qualify for an FHA mortgage?”
FHA loans require a variety of financial qualifications including FICO scores, your history of payments on financial obligations, your debt-to-income ratio, and other factors. Lender standards and FHA loan rules both apply, as do some state laws and other regulations.
There’s no individual factor that determines a borrower’s ability to qualify for an FHA mortgage, a number of variables come into play as mentioned above.
Sometimes one or more factors can disqualify a borrower, it’s true-a low FICO score, debt ratios that are too high, missed payments in the last 12 months leading up to the loan application, or major changes in the financial position of the applicant before closing day.
That said, it seems that the concern in this particular reader question has much to do with the nature of the income, its taxation or lack thereof, etc.
In such cases, the lender would have to review the particulars of the borrower’s income and employment to see if it qualifies as “verifiable” meaning that the lender is able to determine that the income and employment are stable and likely to continue.
There are many things that can factor into a situation like this. A borrower may have seasonal work that is managed differently than a traditional full-time job. Having such work is not a disqualifier, but it must meet FHA standards.
Borrowers with non-traditional jobs or who are self-employed are required to furnish additional paperwork to help the lender determine whether the income is verifiable or not. Your tax records, pay stubs, employment history, and other factors become even more important in such cases.
The best thing to do is to have a conversation with a loan officer about a particular set of circumstances to see what may be possible with an FHA mortgage. It may simply be a case of having to provide some additional paperwork, but factors like time on the job and the skills required to do the job are very important.
It’s never good to assume your circumstances count you out of the running for an FHA mortgage. Have that conversation with a loan officer and you may be surprised to learn what your options are.