Posted on: 23rd Dec, 2009 02:01 pm
I'm new to home buying & mortgages, so bear with me ... I hope what I post makes sense!
My husband and I just got married in August & are beginning the mortgage/home search process. We are located in Broward County, Florida.
There are quite a few wonderful foreclosures in our area. That being said:
I called a local bank to start the pre-qualifying/approval process...
After pulling my husbands credit and mine, I was told that my husband could not be on the FHA loan, as his credit score was below the 660 minimum.
First, I thought the minimum was 620 ... but anyway ... fine, we do it just under my name.
Based on monthly gross from self employment income of 2,400 per month ... I will qualify on my own for the 75,000 range that we are considering.
My main question is this:
Last years income is almost non-existant for me. This was due to business expenses that essentially resulted in a loss.
This year (2009) is much better, and DOES reflect 2,400 per month.
I will also have my husbands income of 3 to 4,000 per month. Unfortunately that income won't count, as he cannot be listed on the loan.
How important is last year's income?
They told me that the figure used is [color=Blue:7635ef32d9](Gross income less deductions for expenses, so your AGI would be qualifying income)[/color:7635ef32d9]. I copied this from the e-mail they sent me.
This doesn't really make sense, as my gross minus business expense total is higher than my AGI, due to personal deductions ...
Basically the figures I'm looking at are:
2008 AGI: -3543.00
2008 NET: 407.00
estimates for 2009 are different because of husbands income, which they said they could seperate my income ...
My gross will be around 46,000
I'm trying to figure out if I will still qualify for 75,000 based on these amounts, and if not approximately what amount I would qualify for.
Oh, if it matters my qualifying score is 662 ...
Honestly, the houses we have mainly been looking at are under 55,000 ... but I would prefer to have some "wiggle" room!
We will be coming up with 3.5% for down ... possibly more, depending on husbands christmas bonus.
Thank you in advance for your assistance.
Eve
My husband and I just got married in August & are beginning the mortgage/home search process. We are located in Broward County, Florida.
There are quite a few wonderful foreclosures in our area. That being said:
I called a local bank to start the pre-qualifying/approval process...
After pulling my husbands credit and mine, I was told that my husband could not be on the FHA loan, as his credit score was below the 660 minimum.
First, I thought the minimum was 620 ... but anyway ... fine, we do it just under my name.
Based on monthly gross from self employment income of 2,400 per month ... I will qualify on my own for the 75,000 range that we are considering.
My main question is this:
Last years income is almost non-existant for me. This was due to business expenses that essentially resulted in a loss.
This year (2009) is much better, and DOES reflect 2,400 per month.
I will also have my husbands income of 3 to 4,000 per month. Unfortunately that income won't count, as he cannot be listed on the loan.
How important is last year's income?
They told me that the figure used is [color=Blue:7635ef32d9](Gross income less deductions for expenses, so your AGI would be qualifying income)[/color:7635ef32d9]. I copied this from the e-mail they sent me.
This doesn't really make sense, as my gross minus business expense total is higher than my AGI, due to personal deductions ...
Basically the figures I'm looking at are:
2008 AGI: -3543.00
2008 NET: 407.00
estimates for 2009 are different because of husbands income, which they said they could seperate my income ...
My gross will be around 46,000
I'm trying to figure out if I will still qualify for 75,000 based on these amounts, and if not approximately what amount I would qualify for.
Oh, if it matters my qualifying score is 662 ...
Honestly, the houses we have mainly been looking at are under 55,000 ... but I would prefer to have some "wiggle" room!
We will be coming up with 3.5% for down ... possibly more, depending on husbands christmas bonus.
Thank you in advance for your assistance.
Eve
Adonis, thank you,
Yes, I know they are looking for income for the past two years. The answer so far from the lender is simply "We need your tax returns from 2008 & 2009" ...
I'm just looking for some outside opinions ... and possible experience with a situation similar to mine.
My income wasn't necessarily non-existent last year, but my adjusted gross was ...
My original gross income from 2008 was around 20,000. I simply had a lot of deductions/expenses that were able to be taken last year!
Yes, I know they are looking for income for the past two years. The answer so far from the lender is simply "We need your tax returns from 2008 & 2009" ...
I'm just looking for some outside opinions ... and possible experience with a situation similar to mine.
My income wasn't necessarily non-existent last year, but my adjusted gross was ...
My original gross income from 2008 was around 20,000. I simply had a lot of deductions/expenses that were able to be taken last year!
eve, the major question you'll run into is concerning how they will be able to justify current income based on your excessive deductions in 2008. are you self employed? i'd suspect not, based on your comments, but that's certainly germane to the conversation.
i'm surprised at the 660 requirement for your husband - you may want to ask around to see if other lenders are more open-minded on the credit score front. that'd save you some stressing on the income.
i think what you're going to need to do is to document what has changed since 2008 vis a vis your expenses and why current income is more likely to continue (and increase). in other words, your expenses were higher because...and will be lower now and in the future because...
if you were not required to submit tax returns, it'd be easier for you, of course. are you commission-based?
i've asked a lot of questions, but i'm hopeful this is helpful nonetheless.
i'm surprised at the 660 requirement for your husband - you may want to ask around to see if other lenders are more open-minded on the credit score front. that'd save you some stressing on the income.
i think what you're going to need to do is to document what has changed since 2008 vis a vis your expenses and why current income is more likely to continue (and increase). in other words, your expenses were higher because...and will be lower now and in the future because...
if you were not required to submit tax returns, it'd be easier for you, of course. are you commission-based?
i've asked a lot of questions, but i'm hopeful this is helpful nonetheless.
George,
Thank you very much for taking the time to reply.
I AM self-employed as a massage therapist. I have been self employed since 2006, and shown an increase in gross income each year, but 2008 I had a lot of marketing expenses because I was determined to make my business more profitable. Hence, 2009 being a much better year for me!
I'm curious as to what in my comments made you think that I wasn't self-employed...
Also, admittedly, in 2008 I was not claiming all of my income. I was advised by an ex CPA that I could treat approximately 10,000 as "gift", even though it was income. I think he was telling me this to prevent my owing taxes, but it has ended up hurting me. I was new to business owning & trusted in what other's told me at the time.
I wish there was a way not to submit tax returns for this FHA loan, it would certainly make things easier!
Thank you for the advise on checking with other lenders about the 660 requirement, I too, found that to be high ... as I stated, I was under the impression that the FHA requirement was 620!
Would this be a simple matter of calling and saying, "I was told by another lender that minimum FHA score is 660, do you have this same requirement?"
I hate to make calls & bother people & essentially give them the idea that I'm just asking out of curiosity & not serious about buying!
Again, thank you for taking the time to reply to my question.
Thank you very much for taking the time to reply.
I AM self-employed as a massage therapist. I have been self employed since 2006, and shown an increase in gross income each year, but 2008 I had a lot of marketing expenses because I was determined to make my business more profitable. Hence, 2009 being a much better year for me!
I'm curious as to what in my comments made you think that I wasn't self-employed...
Also, admittedly, in 2008 I was not claiming all of my income. I was advised by an ex CPA that I could treat approximately 10,000 as "gift", even though it was income. I think he was telling me this to prevent my owing taxes, but it has ended up hurting me. I was new to business owning & trusted in what other's told me at the time.
I wish there was a way not to submit tax returns for this FHA loan, it would certainly make things easier!
Thank you for the advise on checking with other lenders about the 660 requirement, I too, found that to be high ... as I stated, I was under the impression that the FHA requirement was 620!
Would this be a simple matter of calling and saying, "I was told by another lender that minimum FHA score is 660, do you have this same requirement?"
I hate to make calls & bother people & essentially give them the idea that I'm just asking out of curiosity & not serious about buying!
Again, thank you for taking the time to reply to my question.
i thought perhaps you were in sales and writing off unreimbursed business expenses - inasmuch as you never directly mentioned self employment in your original post, i figured that was not the case, i guess.
you took the advice of an "ex-CPA." maybe that's why he's and "ex." really, just kidding on that point, but you never do know. it's a tough question to ask and answer - depends on what you wish to do at the time; and you weren't in the home-shopping mode at that time, i gather.
i wouldn't bother letting other lenders know you were told 660 was the magic number, but simply ask the question about what the minimum might be at a particular lender. either way, they're used to getting blind calls that don't go anywhere. feel free to bother a few lenders that way. don't tell them i said it, though.
and you're quite welcome for the responses - happy new year.
you took the advice of an "ex-CPA." maybe that's why he's and "ex." really, just kidding on that point, but you never do know. it's a tough question to ask and answer - depends on what you wish to do at the time; and you weren't in the home-shopping mode at that time, i gather.
i wouldn't bother letting other lenders know you were told 660 was the magic number, but simply ask the question about what the minimum might be at a particular lender. either way, they're used to getting blind calls that don't go anywhere. feel free to bother a few lenders that way. don't tell them i said it, though.
and you're quite welcome for the responses - happy new year.
Happy New Year to you as well, George.
I called another local lender yesterday afternoon & was very surprised to hear the same number. However, this lender stated that under certain circumstances he was able to consider down to 530 FICO scores & still obtain 96.5% financing. I will be speaking with him again on Wednesday to discuss further, but hopefully he will find a way to qualify both myself & my husband.
Eve
I called another local lender yesterday afternoon & was very surprised to hear the same number. However, this lender stated that under certain circumstances he was able to consider down to 530 FICO scores & still obtain 96.5% financing. I will be speaking with him again on Wednesday to discuss further, but hopefully he will find a way to qualify both myself & my husband.
Eve
read "an" for "and" in my reference to the cpa. my use of this language has taken a hit in the last few months, i'm afraid.
i pray i'll be more vigilant starting right now.
eve, it's fascinating that there are "certain circumstances" under which that lender will consider lower scores. i suspect rate and point(s) have some impact within those circumstances.
i pray i'll be more vigilant starting right now.
eve, it's fascinating that there are "certain circumstances" under which that lender will consider lower scores. i suspect rate and point(s) have some impact within those circumstances.
I thought the "certain circumstances" thing was interesting, too.
I was able to speak with them today & it turns out that they will work with FICO scores all the way down to 530, BUT, you can't have any late payments or other negatives at all in the last 24 mos.
I'm pretty sure that if you don't have any negatives in the last 2 years your credit score will be higher anyway!
So... I have a few local lenders that are on the list to call ... but looks like I'm back to qualifying just based on my income.
I was able to speak with them today & it turns out that they will work with FICO scores all the way down to 530, BUT, you can't have any late payments or other negatives at all in the last 24 mos.
I'm pretty sure that if you don't have any negatives in the last 2 years your credit score will be higher anyway!
So... I have a few local lenders that are on the list to call ... but looks like I'm back to qualifying just based on my income.
i have to agree with your assessment of that 24 month requirement. however, if someone's score 24 months ago was 350 or so, i suppose 24 months of favorable information might only improve the score 180 points - not! yes, i think the resulting score of 2 years of good history would be a bit higher than mid-500s.