Other income, my parents will be living w/me can I use them as Other Income to qualify

Asked by Kenny, 85231 Fri Aug 5, 2011

My income is very low due to economy but has pickup up this year and some last year. Want to buy a home in the $100-130K range.

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, ,
Fri Aug 5, 2011
Hi Kenny,

There are a couple of things that need to be clarified here.

1) The USDA program has county income limits based on the total number of people in the household so if your parents are going to live with you, their income will be included to determine whether or not you qualify under the county income limits.

2) The income and debts of all parties on the actual loan will be reviewed to determine whether or not they have the ability to re-pay the loan.

I think #2 is what you're actually asking about; right?

Here is where the USDA mortgage is unique. You can use household income that IS NOT included in the loan as a "compensating factor" for exceeding the programs debt to income ratio requirements up to a point but it will only work if your parents are going to live with you since the USDA program does not allow non-occupying co-borrowers (your parents co-signing with you for the loan without actually living in the home).

At this point you need to have a mortgage professional "look" at the numbers to determine how you need proceed.

FHA will allow your parents to co-sign without living in the home.
0 votes
Bill Parker,…, , Scottsdale, AZ
Fri Aug 5, 2011
Hi Kenny:

USDA loans are a bit different than most of the other loan products you see out there. With USDA you have to qualify by having LOW income amounts, as USDA is designed to help low- to moderate-income people get into affordable housing. USDA has two different loan programs--Direct and Guaranteed. Direct requires the TOTAL income of all occupants over 18 be LESS THAN 80% of the "Area Median Income" (AMI) which, for the Phoenix area is set at $60,000 for three adults (80% * $60,000 = $48,000). Guaranteed requires the TOTAL income to be less than 115% of the AMI.

There are a number of other guidelines to be met for these loans, but that is not what you are asking about, so just be aware.

So, sure your parents' income can be counted; it must be counted.

Good luck. Let me know if I can help any further.

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

Legacy Group Lending, Inc.
15333 N. Pima Road, Suite 300
Scottsdale, AZ 85260
(O) 480-993-3080; (M) 602-565-3646; (F) 480-993-3081
EM: Bill.Parker@Legacyg.com
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0 votes
Thelma D Cha…, , Arizona
Fri Aug 5, 2011
You can use your parents income to qualify only if they are on the loan with you. Maybe you qualify for a FHA loan. In this case your parents would have to be on the loan with you but not required to live with you. Feel free to contact me at 520-440-8230 or tchavez@fairwaymc.com
0 votes
Jack Gillis, Agent, Dallas, TX
Fri Aug 5, 2011
If they sign on the loan with you then their income may be included. If it is a property, such as a duplex, then you may live in one side, rent the other side and use 75% of that rental income towards your qualifying.

Jack Gillis, M.B.A., J.D.
Jack Gillis Realty Advisors
Nathan Grace Real Estate, Broker
5619 Dyer Street | Suite 100
Dallas, TX 75206
Cell: 214.718.4910
Email: Jack@JackGillisRealty.com
0 votes
Kenny, , 85231
Fri Aug 5, 2011
Looking at USDA Loans and it indicates Other Income could be people living with us without any loan
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