Income requirements for FHA loan?

Question

Hey guys, I've got a question about income requirements to get approved for a FHA loan. I'm planning on purchasing a $250,000 house with a 30-year-fixed FHA loan with 3.5% - 4% down.  My goal is to have a monthly mortgage + PMI + taxes/fees etc at $2,000 per month (max of $2,500/mo including utils and repairs).

I'm guessing it sort of depends on which bank I'm applying at for the loan, but are there some basic universal income requirements for a FHA loan like this?

Thanks guys, I'm working on improving my credit score, but the income requirement part is what really has me worried. Hope I can make this work and thanks for any information.

Chris Mason · Answer

Hi @Chris Morey,

Go show your self employment friendly local lender your rough draft 2016 tax returns.

Adam Drummond · Answer

@Chris Morey

I'm not sure i understand your question.  I believe in order to be approved for an fha loan..  they want to make sure that you're monthly debt including your new mortgage does not exceed roughly 42% of your Gross monthly income.  They include student loans, car paments, hosp bills, credit cars, etc in figuring your debt.  They will also want to see a history of "money reserves" to make sure that you have money for down payment and closing costs, etc.  I hope this helps.

Chris Mason · Answer

Just someone doing conventional mortgages that'll show you how the math works, so you can take that into consideration. It's not super intuitive. It's not your gross number, or your AGI, but our own wonky math.

Chris M. · Answer

Hey @Chris Mason good to hear from you. By self-employment friendly local lender do you mean a person/entity that is not a bank/credit union? Like private lending? Just wanting to clarify.

Thanks, Adam, good to know, appreciate this.

Adam Drummond · Answer

@Chris Morey

I have seen anywhere between 41-45% debt to income ratios used.  I am not a lender though... this is just what i have seen in the past as a Realtor.  Ofcourse, the higher the credit, and more in reserves will probably mean they see you as less of a risk and might allow 45% vs 41%.

Chris M. · Answer

I'm trying to figure out how to approach my 2016 tax return. It's looking like I should write off as little as possible if I want to get a house this year. Basically, if I can show somewhere around $60,000 income for the year of 2016 it sounds like I could get approved based on the income requirements for a mortgage payment of roughly $1,800/mo with my other debts (not many).

The problem is: if I do this I'll be paying Uncle Sam a lot more in self-employment tax (I'm self-employed). But I've heard that you can amend your taxes after the fact to write off the expenses later... is that true?

Also: @Adam Drummond you said roughly 42% of my gross monthly income... do you think local credit unions would be a little more flexible on that?

Thanks again for the information!

Chris M. · Answer

This helps a lot, @Adam Drummond thank you!

Income requirements for FHA loan?

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