When calculating income to qualify for an FHA loan do I use my Adjusted Gross Income?

Asked by 1sttimebuyer, 94102 Sat Mar 3, 2012

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Glen Etherin…, Agent, Orange, CA
Sat Mar 3, 2012
Hi 1st time, we do NOT use your adjusted gross, we use your total gross income if you are a salaried/full time wage earner. If you have commission, bonus, overtime, or other types of variable income, we must use the last 2 years gross divided by 24 for that type of income. Please feel free to contact me if you need any help navigating your way through today's lending criteria
1 vote
Sandy Thomps…, , 60061
Tue Feb 10, 2015
If you are a commissioned or self employed person, the income is a little trickier to qualify. You need to have at least 2 years of history and the amount used is after most deductions. Depreciation and one-time deductions can be added back in. Standard deductions stay in but if you itemize more than that it lowers your income.

This is how many self employed workers get into trouble when trying to qualify. If your writing everything off and only paying taxes on 10K or 20K a year, that is close to the income that will be used. If you are self employed and want to buy a house, you need to be keep this in mind.

We always ask for 2 years in tax returns before pre-qualifying any self employed or commissioned employees so we don't run into problems once the sales contract comes in. If you are a salaried or hourly employee that doesn't file a long return, we only ask for w2's and paystubs until we get a sales contract then we get the rest of the documents.
0 votes
Ivan Diaz, Mortgage Broker Or Lender, 79936
Tue Apr 10, 2012
If you would like to compare FHA to other programs...Please check out my blog: Low Financing Options. New Changes to the FHA program have made it a little more expensive. I can provide a spreadsheet if you like....You can maximize your purchasing power.

Ivan Diaz
Home Mortgage Consultant
(415) 271-7740 direct/cell
0 votes
Gregory Karr, , San Francisco, CA
Sat Mar 3, 2012
No, you would be short changing yourself if you used adjusted gross. You begin with the gross income from your wages plus earnings from 2 years consistent interest income, if you don't plan on spending any of the money that is earning you the interest income. There other sources of income that you may also use. If you need some help call me. I can get you started with your mortgage questions, but only want to act as your rep to buy a home.
0 votes
Matthew Goul…, Agent, San Francisco, CA
Sat Mar 3, 2012

I can only say that you really need to talk to a mortgage professional to get qualified for any loan. Using an online model or a simple form can not take into account the multitude of items that will be considered on a loan application.

In this market you also need to make sure that you have been pre-approved and not just a quick 5 minute pre-qualification chat and a letter issued. Sellers are looking for the best offer and this includes the strongest buyer profile.

Good luck, i'm here if you need any pointers.

0 votes
Mike Ackerman…, Agent, San Francisco, CA
Sat Mar 3, 2012
Oh sweetie dahling - your Uncle Arthur can answer that in a convoluted SF second...

NO! Give your mortgage broker, direct lender your tax return, your last couple wage statements and bank accounts and anything else she/he may ask for.

He was one of my role models when I was growing up in the early 1960's...


G'unkl Mike - You're SF Real Estate Uncle...

Mike Ackerman
Zephyr Real Estate
'toot suite!

0 votes
Oggi Kashi, Agent, San Francisco, CA
Sat Mar 3, 2012
Have you asked this question from your mortgage broker? If you don't have one, try interviewing Brando Hoyles - he is fantastic:

Brandon Hoyles
RPM Mortgage
office: 415.738.7050
cell: 415.713.6938

Oggi Kashi - 415.690.3792 direct
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
Web Reference:  http://www.oggikashi.com
0 votes
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