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FHA Loans, Bank Accounts, And Verifiable Income

October 5, 2023

Some FHA borrowers want to know if they can use a business bank account for verifiable income purposes when applying for an FHA mortgage.

Unfortunately, this question is open-ended, and the answers depend on circumstances. These issues are typically handled on a case-by-case basis.

Does the business bank account belong to the borrower because he or she is a freelancer or self-employed? Is this an expense account that belongs to an employer?

Such situations may have different issues affecting whether funds deposited to this account may be used as verifiable income.

Those who are self-employed must provide documentation, including tax records and other paperwork that demonstrate that the income from the business is reliable and likely to continue.

Freelance or contract employees would likewise be required to provide evidence that their income is consistent and “likely to continue”, a phrase you’ll find repeated in FHA loan rules that govern these types of home loans.

In addition to FHA loan rules, all lenders have their own standards that must be met–the borrower who is self-employed, freelance, or contract would have to meet the lender’s expectations as well as the FHA minimum standards.

When asking questions about FHA loans like the one we’re talking about here, it’s always best to provide more information without divulging private details such as account numbers, bank names, etc.

A description of the nature of the account (an expense account, the borrower’s business account created to deposit freelance income into, or a small business account, for example) is most helpful–it gives just enough additional information to help better answer the reader question.

In the specific case of this reader’s question, the best course of action is to discuss the situation with a loan officer to see what might be required to have the account considered as part of the applicant’s verifiable income.

Joe Wallace - Staff Writer

By Joe Wallace

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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