Will I qualify for FHA?

Asked by Please Help!, Seattle, WA Thu Apr 18, 2013

Hello All,

I am about to try buy a house or duplex using FHA financing, and I would like to know if its possible or if not what steps I can take to make it possible. My situation is as follows....

I am a casino card dealer and my Income of 2800 a month is derived from minimum wage and tips(33% wages 66% tips), the casino I am currently employed at I have been at for 1 year exactly. Before this I was in school for 2 years. I did not get a degree I left school to take my current job. Before school I worked at 2 different casinos for the previous 2 1/2 years.

My credit is being repaired. My scores are all within 4 points of 600 but I have things dropping off almost daily. I have almost no debt. A few collections left that total $500 I am working on getting PFDs

So my questions is do I qualify now?

If not what do I need to do to qualify?

Do I have a chance of a higher front end ratio since I have no debt?

Can I include likely income from a duplex as part of my income?

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Curly Sue, , Texas
Fri Apr 19, 2013
No, I would think you'll need 2 years of employment.
Maybe, but I would stick with 31% front ratio
No, I don't think you can use income from the duplex until you've been a landlord for 2 years.
0 votes
TGIF, with FHA the home buyer can use the income from the duplex without a 2 year landlord history.
Flag Fri Apr 19, 2013
Jirius Isaac, Agent, Kenmore, WA
Fri Apr 19, 2013
Rhonda is right about most everything she says except that I know a couple of banks that might work with you with a score of only 580. There would, of course, be a hit to your interest rate or closing costs.

Your best bet would be to meet with Ronda, myself, or another lender you know that is willing to help you and let them do that. You will most likely be ready sooner rather than later to buy a home.

Good luck to you in any case,
Jirius Isaac
Isaac Real Estate Team
Champions Real Estate Services
TriStar Finance #MLO-107799
Office: 425-483-6849 Cell: 206-841-9976
Winner of Seattle Magazines 5 Star
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Web Reference:  http://tristarfinance.com
0 votes
Rhonda Porter, , Seattle, WA
Fri Apr 19, 2013
Please Help!
I think you're on the right path for getting ready to buy a home... however, I think you may have a little ways to go before you'll qualify based on a couple things I'm reading in your comment.

If your credit is being repaired - are you in a repayment type program?
How recent are the collections?

Most lenders want 640 credit scores or higher for FHA financing. Home Advantage will allow as low as 620 with FHA and provides down payment assistance.

Your income will depend with what you've reported on your tax returns. Can you document a two year history of this type of income? You may need to provide documentation with previous history showing this income (before school) - however, it's possible that you may need to wait until you have two years of consecutive history as a casino card dealer since your income varies (it's not a salary).

Lenders will also want to see that you have a good payment history so "no debt" isn't always good. It's considered "shallow credit".

I recommend that you consider working on your credit. Establish three tradelines and only use the credit cards to buy a tank of gas or a bag of groceries - pay off the debts each month. This will help re-establish your credit and bring your scores up.

If you already have existing credit, you may want to consider keeping those accounts open. Sometimes paying them off and closing them will actually hurt your scores (unless the accounts have nothing but poor credit history).

I would plan working on this until you have a two year job history (actually, two years of tax returns) that you can show the documented income. Your income will be averaged over the two year time period.

This will allow you to improve your credit scores as well and receive better mortgage rates.

With FHA, you may be able to use some of the rent from the duplex as income.

I written about a lot of these topics on my nationally recognized blog - I invite you to check it out.
0 votes
Patrick Beri…, Agent, Seattle, WA
Fri Apr 19, 2013
Send a note to Tina Mitchell of Cobalt Mortgage at tina@tinamitchell.com
0 votes
Ray Akers, Agent, Seattle, WA
Thu Apr 18, 2013
You will not be able to get an answer as to whether or not you are qualified for an FHA mortgage by posing questions in this forum. You need to meet with a lender.

FHA loans are government-regulated so the terms are the same at every lender. Why not check with the bank where you already have a checking or savings account? Good luck.
0 votes
Please Help!, Home Buyer, Seattle, WA
Thu Apr 18, 2013
My tips are not estimated. When we leave for the day we have a box it is counted down and verified by both myself and the cashier we both sign off on it. On my paychecks its shows. Wages and then tips earned. All my income is declared and has been at every casino I have worked at for years.
0 votes
That helps, you'll need to prove every dime. Do you have a down payment saved? You'll need 3.5% of the purchase price and have to discuss how to handle closing costs with your agent and lender.
Flag Thu Apr 18, 2013
Dan Tabit, Agent, Issaquah, WA
Thu Apr 18, 2013
Hi Dealer,
As a formerly licensed lender, I can tell you I wouldn't have a clue based on what you've said so far. Your income will depend on how it's reported on your W2. Tips for restaurant workers are estimated and added to W2's but someone would have to review yours.
Your credit scores "may" qualify with some lenders, but not with most offering FHA. 620 is the minimum for most with others wanting to see 640.
Rental income can't be assumed. You'd need to have a history of receiving payment and then you could only use 75%. Projecting what you "may" get isn't done.
I have a great lender I currently use who works with buyers in your circumstance and assists with improving scores and getting you ready faster than you could on your own.
I would encourage you to meet with them, or another lender because your circumstances are not conventional and you need specific advice.
0 votes
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