Foreclosure in Las Vegas>Question Details

Douglas Moniz, Other/Just Looking in Honolulu, HI

how hard is it to qualify for a loan if your income is based on tips?

Asked by Douglas Moniz, Honolulu, HI Mon Feb 7, 2011

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16
Hi Douglas,

The question at hand is....Are you reporting the tips. I know a lot of people in that industry don't. If you are not reporting them, and paying taxes on them, then YES, it is hard. Your income will be based, as stated below, on what you have reported. If it's not on file with the IRS, then it does not count.

Hope this helps.

Jonas Mancuso
Remax Int'l
http://www.talktohouston.com
2 votes Thank Flag Link Mon Feb 7, 2011
Tip income is still income as long as it is reported and can be documented.
0 votes Thank Flag Link Thu Nov 15, 2012
Douglas-

It really depends on the type of loan you are trying to do and how long you have been receiving/reporting the tips. With FHA loans, if you have a 2 year history of receiving tips and they show on your paystubs in some sort of tip compliance most lenders will average your tips over 2 years to get that number and add it to your hourly wage.

If you have gone from a job where you were a W2 employee and haved recently become a tipped employee, some lenders will include your tip average after about 18 months but it is best to have 2 years.

In Las Vegas, I work with people all the time that their tipped income is much higher than their hourly wage and that is acceptable. Once again, we can only use what is reported on your taxes.

Please feel free to contact me anytime.

Andy Gutman
(702) 575-3757 cell
andy_gutman@yahoo.com
http://www.facebook.com/andythemortgageexpert
0 votes Thank Flag Link Sat Feb 11, 2012
If you are having a hard time qualifying for a loan due to...

-Income based on tips
-short sale
-Poor credit
etc....

Try a private lender. The terms are different from a typical lending institution but can be a great route to taek if you have the cash.

I work with a few private lenders who are always looking to help out buyers in this situation.

Jaime Irving
Sellstate NRES
702-480-1791
0 votes Thank Flag Link Wed Feb 8, 2012
Douglas..I believe you still have to report minimum wage earnings, or your employer does..So you should show some income and if your FICO score is good, you can get a low-priced, bargain home in a good area with even a minimum wage income.

David Cooper Licensed Professional Investor +1-702-739-8820
0 votes Thank Flag Link Thu Dec 8, 2011
its actually not that hard to qualify for loan with tip income, as long as the tips are claimed and the person has paid taxes on them. If the person claims no tips then they cant use that money as income. Its not 2004 anymore.
0 votes Thank Flag Link Thu Dec 8, 2011
It shouldn't be hard at all, a lot of people make really good money working based on tips. The problem comes when these tips are not fully reported! You will only qualify on what has been reported and taxed on official record.

You might fall into the same problem as many small business owners or self employed individuals that have a hard time showing income due to the fact that they are at the same time trying to minimize taxes payed (write offs, expenses and what not).

Contact a local lender and see what they can do for you. Good Luck
0 votes Thank Flag Link Thu Aug 18, 2011
Hi Douglas,

Not extremely difficult. They will generally take your stated tip income and average it over the last 24 months.

In addition, My company will go up to 56.99% debt to income ratio (your monthly income divided by your total monthly debts plus your new monthly payment, taxes and insurance) on FHA loans which can also help you qualify for a little more home.

Best Regards,

Rick Kartchner / Senior Loan Officer
Home Funding Corp / Cell 702 468-7558
Office 702 220-9350 / Fax 702 220-9355
Email rick@rickkartchnerteam.com
http://www.lasvegasmortgagexperts.com
NMLS # 363487
0 votes Thank Flag Link Mon Feb 7, 2011
Hi Douglas,
If you are looking to buy in Las Vegas, Nevada shoot me an email or give me a call. I can give you some local loan officers information. You can then talk to them directly about your situation.
Thanks,
John J. Longeway
Keller Williams Realty Southern Nevada
702-777-0002
Web Reference: http://www.JJLVRealtor.com
0 votes Thank Flag Link Mon Feb 7, 2011
Hi Douglas,
If you are looking to buy in Las Vegas, Nevada shoot me an email or give me a call. I can give you some local loan officers information. You can then talk to them directly about your situation.
Thanks,
John J. Longeway
Keller Williams Realty Southern Nevada
702-777-0002
Web Reference: http://www.JJLVRealtor.com
0 votes Thank Flag Link Mon Feb 7, 2011
Douglas, your best bet is to talk to a loan agent at your local bank. They have all the programs available to people and can best help you out in your situation.
0 votes Thank Flag Link Mon Feb 7, 2011
Hi Douglas:
Answer is easy if you report on your income taxes we count as income if you dont unfortunately that wont help. These days what you state as income you will need to show in paper.
thanks

Pilar Temoche
Realty One Group
702-326-9816
0 votes Thank Flag Link Mon Feb 7, 2011
As others have said below, the big question is whether you report these tips or not. Many self employed folks have a hard time qualifying. Not because of lack of money, but because its not showing up on their tax returns. They often show lots of business expense deductions, and end up having lower income as a result. Talk to a lender. Good luck!
0 votes Thank Flag Link Mon Feb 7, 2011
With low interest rates and prices it may be easier to qualify for a home than you think. It just depends on your tip compliance rates, debt to income ratio, credit and other normal qualifying aspects. It never hurts to try.
0 votes Thank Flag Link Mon Feb 7, 2011
Hi Douglas,

Both gentlemen below are right. Mortgage lenders base the amount of money they're willing to lend you on the amount of money you make (among other things like credit score, credit history, job stability, etc.). In order for them to confirm this, they ask for two years of your tax return.
If your pay is more than enough to give you a debt to income ratio (how much you owe per month over how much you make per month) that falls within their qualifications (29/41 max for FHA and 28/36 max for conventional), then you'll get the loan.
So if you report all your tips on your taxes, you should have no problem (as long as credit score, credit history, job stability, etc. are good). However, if you don't report all of your tips, then your debt to income ratio might be higher than the maximum, therefore, it would be a challenge to get a loan.

Good luck.
0 votes Thank Flag Link Mon Feb 7, 2011
Douglas it is not hard. 2 years employment, decent credit score, 2 years tax returns and you will be approved based on the income that you reported to the IRS.
0 votes Thank Flag Link Mon Feb 7, 2011
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