Qualifying for Loans
I recently got in to the world of Real Estate and am looking to get into my first deal. I work as a Salesman where my base is only $8 hourly, although my income after commission is more than enough to qualify for a conventional or FHA loan. However, I recently spoke to a lender and they informed me that in order to have my commissions count towards my actual realized income I have to have at least 2 years of history earning commission, otherwise I can only count my base pay as my income. Based on this I would either have to wait 8 more months, or get a co-signer for my first deal. Apart from getting a co-signer is there any other way around waiting until the 2 year mark to get a loan?
Were you previously in college? I had to show my college transcripts for my first 3 deals because I didn't have 2 years of income prior to that. Also talk to more than one lender. Lenders may not budge on the employment requirement but it wouldn't hurt to talk to a few.
Hi Zack -
Unfortunately with FHA, there's no way around waiting the 2 years to be able to use the commission. Conventional on the other hand, may be accepted with only 12 months with other positive factors. See guidelines below:
Ultimately, you'll need to add more income to the file if FHA is the only option. Only ways to do that without another job yourself is : add a co-signer, wait for your 2 years, or purchase a multi-unit where you can use the projected rents from the unoccupied rents to qualify you with more income.
If the DTI ratios are close, you can lower your purchase price, or put more money toward closing for a reduced rate to lower the total mortgage payment.
Hope that helps. Let me know if I can do anything else for you.
B3-3.1-04, Commission Income (12/04/2018) (fanniemae.com)
