Per the 4155, the FHA bible for those of us in the business, "Both overtime and bonus income may be used to qualify if the borrower has received such income for the past two years and it is likely to continue. The lender must develop an average of bonus or overtime income for the past two years and the employment verification must not state that such income is unlikely to continue."
Most people stop reading there. I have taken over many "declined" loans from other lenders because they don't read or know to read the sentence that follows: "Periods of less than 2 years may be acceptable provided the lender justifies and documents in writing the reason for using the income for qualifying purposes."
This line is golden for those who have been turned down because the principals involved in helping them get a loan did not know this. And so, another reason I love the FHA loan. The flexibility in structuring this loan is nothing short of incredible.
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4 comments:
Do you know anything about CHFA in Colorado? They said it's similar to FHA.
We got decline from CHFA because my husband worked overtime a lot for last 30 days (it shows on last 2 check stubs). They said he earned too much and it's over the income guideline. However, it's not normal for him to work overtime like this. His boss were short on people. So he helped them out. Now his boss hires the new guy and he won't work overtime anymore. He will make only $29,640. After adding up w/ me we are $69,640 which is under $71,400.
They said they will base everything on our last check stubs. Those overtime is not continue.
What should we do? We're closing next week. Our lender screws us by telling us 6 days before closing. She should tell us before the deadline on the contract. Our earnest money is in danger right now. She's pushing us to conventional which way higher rate and more closing cost.
We're freak out. Thank you very much if you could help guide us something.
I am not familiar with CHFA. And I would need to know more about your file before I could profer advice (ie, your sales price/loan amount, debt-to-income ratio, etc.). Feel free to contact me; I'd love to help. www.juanitamcdowell.com has all of my information.
Juanita,
So many employers have difficulty with the overtime income; what exact verbage should we include on the VOE that addresses an FHA203k loan to get their overtime income through?
J. Bartrum
Loan officer
@ J Bartrum Nice speaking to you the other day about this.
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