Financing in 94030>Question Details

Amy, Home Buyer in 94030

I have no income. I live off my my husband's investment income.We file joint taxes. Can I use that income to qualify for a loan in my name only?

Asked by Amy, 94030 Sun Nov 7, 2010

I am listed as a homemaker on our joint tax returns. He is overseas. I want to purchase a property in my name only, having my name only on the title and on the loan. Can I use our joint tax returns to qualify for a loan? I putting down 35% cash.

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John Dutra’s answer
If the investments are in both of your names, you would be fine. However, if the investments are in your husband's name alone, then you would need a power of attorney from your husband authorizing you to sign on his behalf to make the loan work. He would need to be on the loan/title for a lender to use the income to qualify.

The lender looks at the income not only from a qualification stance, but from an access point of view as well.
0 votes Thank Flag Link Mon Nov 8, 2010
We'd have to see the tax returns and asset statements Amy to be able to tell if this would work.

One BIG item not discussed yet - are you trying to do this without your husband knowing? CA is a community property state and your husband will be required to sign a Quit Claim deed prior to your taking ownership of the home. If he's overseas then he'll have to sign the form at a US Embassy. I ran into this with a contractor working inside the Green Zone in Baghdad. Husband had to walk across the street to get the embassy to notarize the Deed.

What's a Quit Claim? It's a form the non-borrowing spouse signs to indicate they understand they have no ownership interest in the real estate being financed.

You won't be able to buy without the signed Quit Claim.
1 vote Thank Flag Link Mon Nov 8, 2010

California is a community property state so…is the income community property or is it the separate property of your husband? If it is community property you can use it to qualify for a loan. If separate property, you cannot use it.

In any event, as Michael Mullin pointed out (thumbs up to him), you will most likely be unable to finance the property in your name without your husbands signature. That would be true even if the income was all yours.

You need to talk to an experienced local mortgage professional. I suggest John Dutra of Summit Funding. Call John at 510-364-0764.
0 votes Thank Flag Link Mon Nov 8, 2010
Not unless you are part owner of the business. But if you do not own part of the real estate investment firm then no you can't
0 votes Thank Flag Link Mon Nov 8, 2010

As is the case in most instances, there is no single answer to your questions based on the information provided. I concur, under certain circumstances with both the other answers.

In general you need to have the income to qualify, there are programs depending upon your situation where the investment income could be used to qualify based upon the down payment you are suggesting.

I would highly recommend you contact a Mortgage Professional to guide you through this process. If you don't know one, please feel free to contact me and I will be happy to guide you.

0 votes Thank Flag Link Mon Nov 8, 2010
Hi, Amy. In short: no. You can only utilize income that you earned. Now, if you and your husband are both on the investments (i.e. stocks, bonds, mutual funds, rental properties,) that's a diffrent story. If so, your last 2 Federal tax returns need to reflect that income. If there were any losses or write offs, the last 2 years of that will be added up, divided by 24 months, and then deducted against your 2 year averaged earnings.
0 votes Thank Flag Link Mon Nov 8, 2010
Amy -

If you file joint tax returns and you get a letter from him stating that you have the right to use the income - there may be a way to work out the loan. You need to get to a loan officer to clearly explain the situation to see if the underwriters will accept the income.

Bring 3 years of tax returns with you so the Loan Officer can copy them to review with the underwriter. Also bring copies of the asset statements for the assets that provide the investment income.

You will have to be able to prove that there are sufficient assets to throw off the income necessary to support the mortgage debt - and illustrate that the income will continue for at least 3 years. You should have sufficient reserves in cash after down payment to cover payments for at least a year.

Good Luck!

Gerry Dunn
Associate Broker
MD/VA and DC

0 votes Thank Flag Link Mon Nov 8, 2010
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