Articles Tagged With: Income Verification

July 27, 2016

FHA Loan Questions: Income Verification

A reader asks, “I threw out my pay stubs not knowing that I would be purchasing a home this soon. Is there anything else that can be used in place of pay stubs to get approved for an FHA loan?” “I provided copies of my last four pay checks, a statement from my employer showing my cumulative earnings so far this year, my original W2s from 2014 and 2015, my federal and state taxes from 2014 and 2015, and three months worth of bank statements that show the direct deposit from my employer every two weeks for those three months.” In general, you may find that tax documentation, current pay stubs, and bank statements COULD provide an acceptable substitute, depending on the lender. However, this is a situation that requires | more...

April 8, 2016

FHA Loan Income Verification Rules: Military Income

By Joe Wallace

Military members and veterans have plenty of reasons why they might choose an FHA mortgage or refinance loan. Regardless of the reasons why you choose to go FHA, there are rules for military income verification you should know that will help both in the planning stages and when you’re submitting paperwork to the lender. To begin, military income is not simply defined as basic pay. Military pay can include a variety of things. HUD 4000.1 has a definition that clears up any ambiguity about the basic pay and allowances allowed to be included in the debt to income ratio once verified: “Military Income refers to income received by military personnel during their period of active, Reserve, or National Guard service, including: –base pay –Basic Allowance for Housing –clothing allowances –flight | more...

April 7, 2016

FHA Loan Income Standards: Stable and Reliable Income From Part Time Sources

By Joe Wallace

A reader asked us a question about FHA loan standards for income verification recently; “I was told today that my part time job could not be used because its not on a continuous basis. Is that true? I have worked this job part time for the last 4 years and its through out the year.” “Its home health care so I watch patients here and there throughout the year. As mentioned I have been employed there since 2012. Why will FHA not approve that income because I have not worked there in the last 30 days but Im still an employee. I also have a full time job.” FHA loan rules are very clear about the nature of part-time income when it comes to verifying it for the FHA loan. | more...

November 13, 2015

FHA Home Loan Income Rules: Disability Income

By Joe Wallace

FHA loan rules in HUD 4000.1 have requirements for the lender to follow when it comes time to verify income. One type of income the lender may need to verify is disability income from SSI, the VA, or private disability benefits. HUD 4000.1 has this to say about this type of income, starting with a basic definition of terms: “Disability Benefits are benefits received from the Social Security Administration (SSA), Department of Veterans Affairs (VA), other public agencies, or a private disability insurance provider.” “The Mortgagee must verify and document the Borrowers receipt of benefits from the SSA, VA, or private disability insurance provider. The Mortgagee must obtain documentation that establishes award benefits to the Borrower.” The timing of such benefits is crucial, as HUD 4000.1 adds, “If any disability | more...

October 22, 2015

FHA Loan Rules For Income: Part Time Employment

By Joe Wallace

The new FHA single family home loan program policy handbook, HUD 4000.1, has a section on income verification rules that includes instructions to the lender on how to include part-time income in the FHA loan applicant’s debt-to-income ratio. HUD 4000.1 makes an important distinction between full-time income and part-time earnings, and borrowers need to understand how FHA loan rules make the distinction. When it comes to full-time work, HUD 4000.1 Part II Section A states: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” For part-time income, the rules say: “Part-Time Employment refers to employment that is not the Borrowers primary employment and is generally performed for less than | more...

October 16, 2015

FHA Loan Income Questions: Commissions

By Joe Wallace

There are lots of questions about FHA loan income standards–especially where commission income is concerned. Here’s one of the latest reader questions from the comments section, asking about FHA loan income rules for commissions–the reader has a job that “… pays 60% income from salary and 40% from commissions now and am being recruited to another company same industry, same job title and scope of work but better pay. A slight increase in salary and commissions with the new company recruiting me, but same type of ratio 60% salary 40% commissions.” “I have been in the same job title for 2+ year now. Can FHA or an underwriter use my new income with new higher commissions at the new company for a loan? Or do I have to wait for | more...

July 15, 2011

Verifiable Income Rules For FHA Borrowers Between Jobs

By Joe Wallace

FHA loan applications require the borrower to submit information on past and current employment including gross income, how long the job has lasted, and other details. This data is not accepted at face value by the lender; the FHA requires the loan officer to verify sources of income to make sure they are legitimate and acceptable.

May 20, 2011

FHA Loans and Non-Taxable Income

By Bruce Reichstein

FHA applicants come from a wide range of backgrounds, and no two house hunters have exactly the same circumstances. Some borrowers bring a large down payment to the transaction, while others may need down payment assistance (as permitted by FHA guidelines) and help finding just the right type of FHA mortgage. When it comes to verifiable income, it’s the same–borrowers come to the FHA loan application process with a diverse range of income sources. A common question about FHA loans and effective income sources has to do with the nature of that income. Can a potential FHA borrower list money from public assistance, foster care, disability payments or other types of non-taxable income? Will an FHA-approved lender be able to use this income in calculating the borrower’s debt-to-income ratio? As | more...