Recently I have worked with three different clients with different types of scenarios of income. One was similar to your own. My client was refused a loan by three lenders, rather than give up we switched lenders and worked with a great Broker that got him a great 30 year fixed rate at 5 1/8 percent. We closed on his home in one month! This is unheard of in these times.
The answer to your question is "it depends on the lender and how hard they work for you". I know people who have been refused by one lender only to close with another. It sounds like you can afford the home you are looking to purchase. If you are interested in working with a great team of Lenders and Realtors that have years of experience working hard for their clients, contact me at email@example.com
Hope this answer was helpful!
Realtor for E-Realty Services, East Stroudsburg, PA
Jen, how thorough was this pre-approval and when did it take place? Recently? Did they review all of your documentation as part of the pre-approval process?
Mortgages generally require a 2-year employment history, certain exceptions can be made such as in the situation where someone graduates from school and gets a job related to their field of study or someone who has had an absence from the workforce (such as due to raising a child) but can document a 2-year employment history prior to it, as well as other unique circumstances. So it doesn't always come down to what someone made the prior year, or even having a 2-year employment history.
When trying to use income to qualify, the source of the income needs to be evaluated. 9 times out of 10 income comes from employment (vs. retirement, investment income, etc.) and Jen like in your situation your 3 sources are also employment. Babysitting is typically considered self-employment (unless you work for a company that pays you a paycheck with income tax, etc. taken out), and self-employment needs 2 years of tax returns being self-employed as the same "company". Same would go for cleaning apartments, unless you work for a company as an employee, it'd be considered self-employment. Often a 2-year average of self-employment earnings (gross income from the business, minus expenses) on an individual business basis is what the qualifying income figure will be.
Hostess job in a restaurant usually is a W-2'd employee position with a regular paycheck, etc., so if it is for you then it'd be treated as employment, not self-employment. Usually after an employment gap such as you had, being back on a full time job for 6 months often can qualify. Assuming you are a full time regular paycheck getting hostess, a lender still may find it uneasy to use it as qualifying income unless you specifically were a hostess prior to the gap in employment - as it's not considered the same degree of security of employment as a full time salaried or professional position. If you are a part-time hostess, then part-time employment needs 2 years at the same employer.
Assuming the babysitting & apartment cleaning businesses would be viewed as self-employment, then once you have 2-years of tax returns claiming that type of income you could use it to qualify. If it's actually getting regular paychecks with taxes being taken out, and your hostess job is full time, then at least 2 of the 3 jobs you have would need to have gone on for 2 years in order to qualify - as second jobs (just like part-time employment) also need 2 years of that same second job to qualify.
From what I described above, if your employment doesn't appear to be able to be used, then you may want to look into a co-signer... as at $4k/mo it certainly sounds like you have the income to afford a housing payment on a $150k home.
If you accept the gift for use, then if your total down payment is less than 20% then you would likely have to utilize FHA financing because with conventional financing & less than 20% down, private mortgage insurance is required and when having a non-occupant co-borrower then the PMI companies all require the occupant borrower to qualify on their own income-wise.
If the babysitting and Apt. cleaning are regular jobs with pay stubs and you pay taxes on them, the income will be usable. If this is pocket money and your hostess job is your primary source of income, your purchase power will be limited to this.
Meet with a local lender who can review your income and advise you. A co-signer won't help if the issue is income, unless they buy it with you and will be living there too.
thank you for answering... I make about 4thousand a month between babysitting, cleaning apt, and hostess job at a restaurant... My monthly bill payments including car payment and insurance is $800...
Can I get someone else as a borrower to help me with the loan? Or should I just wait the 2 years to prove my income in a W2 form???