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sanze · Joined: 16 Dec 2009 Posts: 1 1.52 Dollars($)

Hi,

I am self-employed and was told by a Senior Loan Officer that since I am self-employed I will not be eligible for an FHA loan. My wife is currently unemployed as of last month. Her credit score is 708 and mine is 720. He explained that I could possibly do a Statement of Income but would need to show a significant amount of money in the bank. This would be our second home. Our first home is a 3 family home and the income from there would basically be paying for this second home. Can we show rental income? He also explained we would need a co-signer. This poses a problem too since the only person we have that would be a good candidate to co-sign is my mother in law and she is very hesistant. She is finishing paying her mortgage on her home this year. Are there any other options? The house is selling for $450,000. We have a 3.5% down payment that is required by FHA.

Thanks,
Steve

gmakerley · Posted: Wed Dec 16, 2009 9:30 pm Post subject:

this is quite confusing. self employment is not a prohibited condition by fha, so i don't quite comprehend that part of your post. that senior loan officer may have forgotten how the english language works and told you the wrong thing...i hope that's it. but are you self employed less than 2 years?

as for "second home" - is this truly how you are approaching it? you plan to maintain the multi-family as your primary home? that would eliminate fha from the mix, definitely. if you're moving from the multi- to this new home, then you'd need to write a shiny, fresh letter of explanation to justify the move and the conversion of your current home to investment. again, not necessarily a reason to disqualify you from fha.

is the co-signer needed because your self employment income is too little? that's all that makes sense to me there. and i must say that your mother in law is a very smart person.

Posted: Thu Dec 17, 2009 5:39 am Post subject:

The primary residence would be the new home. The multi family home would be rented. A co-signer is needed because my income is too little.

gmakerley · Posted: Thu Dec 17, 2009 11:26 am Post subject:

so have they requested that you write a letter to explain your move? it should present you no problems, as moving from a 3-family to a single family home is quite normal. after all, most people relish living in a single family home. i hope they're not troubling you about that.

Posted: Thu Dec 17, 2009 1:39 pm Post subject:

A letter was requested explaining the move from a multi family home to the single family home. Is there any other way to purchase this home without a co-signer? Can we claim rental income to compensate for the lack of self employment income?

tfaulhaber1 · Posted: Thu Dec 17, 2009 2:03 pm Post subject: FHA

FHA allows you to use 85% of the Net Rental income. What do you write off? There are several items that you might be able to add back to your income (depreciation, etc).

gmakerley · Posted: Thu Dec 17, 2009 2:06 pm Post subject:

i don't know about that "several" ted...yes, indeed, depreciation can be added back, but i've not seen anything else given credit by an underwriter in the recent past.

Posted: Fri Dec 18, 2009 7:34 am Post subject:

Thank you all for your help! And for your fast responses.

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Self Employed - FHA Loan??