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FHA Home Loan - Change of Employment

by
(Florida)

Hello. My husband has been in the same line of work for a little over two years; he is an Engineer.

In Feb. 2015, he went from being a W-2 employee to a 1099 employee. We were pre-qualified by a Lender, signed a purchase contract on a home, but I am now a little nervous because our Loan Officer is not the the best communicator.

He stated that he would use an average of my husband's adjusted gross income from his 2013 and 2014 tax returns, then would verify that my husband is currently employed and his YTD. We are getting an FHA loan.

Other Lenders said this was impossible, but I trust that our Loan Officer knows what he is doing, and because my husband has been in the same line of work, we feel positive.

We are supposed to close in less than two weeks; title work in progress, appraisal complete, etc.

Should there be any cause for concern on our part? Also, we are in Florida. Thanks a bunch!

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FHA Home Loan Employment Requirements
by: Jeffrey

Hello,

Thanks for asking your question here. I might add, that is a very good question and you supplied plenty of details.

Your loan officer seems to be correct from what I remember when in the business. If I had a similar situation, I would handle it in the same way.

FHA underwriters look at the last 2 years income. Since your husband has W-2 income for 2013-2014 and if it was sufficient to qualify for a mortgage, that is good.

Now if he's changed to 1099 income in the same line of work and there has not been a big change in income (such as lower) as long as it can be verified, you should be OK.

Work closely with your loan officer, ask lots of questions and make him explain things to you.

Thanks again for visiting my site.

Regards,

Jeff

You Should Be Fine
by: Kay

Hi there. I agree with Jeffrey. The approach that your Loan Officer is taking sounds correct; that is what it says to do in the FHA guidelines. My husband made the same decision but his change from W-2 to 1099 was too short (length of time 1099), so he could not join me on the loan application unfortunately.

But your husband already has at least one year tax return filed with his 1099 income exclusively so the Underwriter can see his actual income now, plus the average of his two years W-2. The clearer the picture to the Underwriter the better.

At the end of the day, the Lender just wants to ensure you can repay the loan. I cannot anticipate that you will encounter any issues with closing. Best wishes and congratulations on your new home purchase!

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Co-Borrower and Down Payment Assistance

by Gwen
(Pine Bush NY)

Hello. I am permenately disabled and want to purchase a home. My income is very low and my mom is going to cosign on the loan. Is it true that I cant get down payment and closing cost assistance for a fha mortgage if I have a cosigner? I live in the Hudson valley in ny and my income is only $1024 a month! So my mom has to cosign i cant get a mortgage any other way. Please help. Thank you



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Down Payment Assistance With a Non-Occupant Co-Borrower
by: Jeffrey

Hello Gwen,

Thank you for coming by my website to ask your question.

You mentioned that your mother would have to be a Co-Borrower with you on a mortgage since you're on disability income.

I suggest you talk with a loan officer that is an expert with FHA mortgages. Here's a page on my site where you'll find some links to help you.

I researched the FHA Mortgage Credit Analysis Handbook 4155.1. I think you need further clarification. It says:

"4155.1 2.B.3.b
Maximum LTV for NonOccupying
Borrower Transaction

When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV). However, maximum financing, as described in HUD 4155.1 2.A.2, is available for

- borrowers related by blood, marriage, or law, such as

- spouses
- parents-children
- siblings
- stepchildren
- aunts-uncles, and
- nieces-nephews, or
- unrelated individuals who can document evidence of a longstanding, substantial family-type relationship not arising out of the loan transaction.

Note: If a parent is selling to a child, the parent cannot be the coborrower
with the child, unless the LTV is 75% or less."

Since down payment assistance programs vary from state to state and county to county that would be a whole other story.

Your first issue is to find out what the max LTV is for your mortgage. Some may say it is 75% while others may say 96.5%.

Once you know how much your down payment will be, then I would look into the grants and/or down payment assistance programs.

Hope this helps.

Regards,

Jeff

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