Desolately Need Help; My income doesn’t count towards FHA loan

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Desolately Need Help; My income doesn’t count towards FHA loan

David Lund
Columbia, MO · Member since 2022 · 122 posts · 66 votes

Hello all,

My girlfriend and I are trying to get a $250,000 FHA loan for a duplex to house hack. We didn't think it would be any issues at all because combined we make enough for that loan amount. After going through the process for pre approval today with a Mortgage banker for home loans they said since my income is a national fellowship stipend it cannot be counted AND my secondary source of income that I've had for 4 months also CANNOT be counted. This made only my girlfriend's income be eligible leaving us pre approved for $200,000, which is very disappointing and discouraging since there are very little duplexes in our area especially ones we'd want to live in for $200,00. This was a dream of ours for so long and any help or insight would be appreciated.


We both have over 750 credit score and 0 debt.


Thank you!

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
3y

Be careful with the people suggesting DSCR loans for this - DSCR Loans cannot be used for house hacking as they have to be pure investment property loans only (can't live in any of the units)

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  • Kenny Smith
    Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes
    3y

    @David Lund

    Do you have any other properties in your portfolio? If so, take a look at the equity you have in it, and consider taking out a HELOC if the numbers make sense.

    I don't know you're area, but you could also talk to your lender about a DSCR loan which is debt service coverage ratio. Essentially they look at what the expected net operating income and if it will be enough to cover your mortgage. You'd be house hacking, so not sure if this would work for you or not.

    If neither work, may just need to wait until you have 2 years of consistent income to show your lender.

    Good luck.

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    3y

    Hi David,

    Ouch, that makes sense though, it's like hitting the lotto. 

    National fellowship stipends are only a one year job (maybe 2) am I right?

    A 30 year Government backed loan on a 1 year job seems like a shaky loan to me.

    So what is your dissertation for this stipend--or is it just teaching?

    Or are you inventing Flubber? https://www.youtube.com/watch?v=JL1HSJLvqVs

    Good Luck!

    0Reply
  • Sarita ScherpereelBusiness Member
    Real Estate Agent · Chicago, IL · Member since 2018 · 659 posts · 376 votes
    3y

    @David Lund I'm so sorry to hear that. I would talk to other lenders to see what else other organizations can do. If FHA doesn't work you might be able to do another low down payment program. For example, here in Chicago I know lenders that offer 5% and 10% down programs that are off the shelf. These programs are not FHA or home possible. I'm not sure how much you have saved but if you can't do have or use your income maybe there are other possibilities with other lenders.

    BiggerPockets has a section for this in the NETWORK tab under Mortgage lenders. I'd also recommend attending meet ups to see what other creative things people in your area have done for financing. 

    This might feel like you've been denied a lot at this time...just try to think about it like it's a delay. You will buy!!! Best of luck! 

    [email protected]773-456-4644
    Sarita Sells4.933 Reviews
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    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Kenny Smith:

    @David Lund

    Do you have any other properties in your portfolio? If so, take a look at the equity you have in it, and consider taking out a HELOC if the numbers make sense.

    I don't know you're area, but you could also talk to your lender about a DSCR loan which is debt service coverage ratio. Essentially they look at what the expected net operating income and if it will be enough to cover your mortgage. You'd be house hacking, so not sure if this would work for you or not.

    If neither work, may just need to wait until you have 2 years of consistent income to show your lender.

    Good luck.


     Thanks for the insight Kenny! This will be our first property.

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Scott Mac:

    Hi David,

    Ouch, that makes sense though, it's like hitting the lotto. 

    National fellowship stipends are only a one year job (maybe 2) am I right?

    A 30 year Government backed loan on a 1 year job seems like a shaky loan to me.

    So what is your dissertation for this stipend--or is it just teaching?

    Or are you inventing Flubber? https://www.youtube.com/watch?v=JL1HSJLvqVs

    Good Luck!

    My fellowship is 4 years and I’m currently on year 2. My dissertation is over lunar plasma surface charging for future Artemis missions!
    2Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Sarita Scherpereel:

    @David Lund I'm so sorry to hear that. I would talk to other lenders to see what else other organizations can do. If FHA doesn't work you might be able to do another low down payment program. For example, here in Chicago I know lenders that offer 5% and 10% down programs that are off the shelf. These programs are not FHA or home possible. I'm not sure how much you have saved but if you can't do have or use your income maybe there are other possibilities with other lenders.

    BiggerPockets has a section for this in the NETWORK tab under Mortgage lenders. I'd also recommend attending meet ups to see what other creative things people in your area have done for financing. 

    This might feel like you've been denied a lot at this time...just try to think about it like it's a delay. You will buy!!! Best of luck! 


     Thank you so much for the encourage and motivation, Sarita! It is much needed at this time. We’ll definitely look into other lenders and programs.

    1Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    3y

    I would skip doing conventional lending and get creative.  Look for seller financing. 

    1Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 505 votes
    3y

    @David Lund, what state are you looking to buy in and do you have money for a down payment? If so, how much? Depending on that, there are additional loan programs out there that don't consider your income like DSCR loans.

    [email protected]818-770-0340
    Bright Skyline518 Reviews
    WebsiteView Page
    0Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y

    Be careful with the people suggesting DSCR loans for this - DSCR Loans cannot be used for house hacking as they have to be pure investment property loans only (can't live in any of the units)

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    6Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 505 votes
    3y

    Yes, DSCR loans are investment property loans. A great way to build wealth.

    [email protected]818-770-0340
    Bright Skyline518 Reviews
    WebsiteView Page
    0Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    3y

    @David Lund not all lenders are created equally. Even though they have the same "tools" in terms of which mortgages they can use for FHA or conventional, some loan officers can find how to get to yes, and some only can find how to get to no. It is frustrating for sure, but keep looking. I went through multiple lenders when I started before, I found my current lender @Joshua Jones. He may be able to help you in MO. He was literally a game changer. 

    0Reply
  • Lyndsay Zwirlein
    Lender · Member since 2020 · 331 posts · 209 votes
    3y
    Quote from @David Lund:

    Hello all,

    My girlfriend and I are trying to get a $250,000 FHA loan for a duplex to house hack. We didn't think it would be any issues at all because combined we make enough for that loan amount. After going through the process for pre approval today with a Mortgage banker for home loans they said since my income is a national fellowship stipend it cannot be counted AND my secondary source of income that I've had for 4 months also CANNOT be counted. This made only my girlfriend's income be eligible leaving us pre approved for $200,000, which is very disappointing and discouraging since there are very little duplexes in our area especially ones we'd want to live in for $200,00. This was a dream of ours for so long and any help or insight would be appreciated.


    We both have over 750 credit score and 0 debt.


    Thank you!


    Hey David! I would recommend having someone take a second look at the FHA option.

    Also as others have indicated, DSCR won't work since you're occupying part of it. For conventional multi family owner occupied, you can do up to 85% LTV. That could be another option if you are able to put 15% down.

    Happy to help if you have questions!

    0Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    3y

    Thank you @John Warren. @David Lund in terms of income whether it can be used or not, it depends. If a stipend is not likely to continue, maybe not. But if it is guaranteed, then possibly. With your part time income from 4 months ago that you started, how many hours are guaranteed? DSCR (debt service coverage ratio) loans might not work as i assume you are doing FHA for the low down payment. Feel free to private message me as well. When it comes to multi units, I handle close to a 100 a year for lending and know the rules and what we can and can not use. I am curious though how they came up with 200K? Did they take in the proposed rent for the potential duplex or not? Many lenders can not use that proposed rent if you do not have the history of receiving rent. However that is not the real guidelines. It's really looking at the whole situation. Don't be discouraged. Not all lenders are created equally. If they were, every lender and banker would do the same amount of business. I have 31 licenses and MO is for sure one of them. Feel free to reach out if you want me to look at it.

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Stacy Raskin:

    @David Lund, what state are you looking to buy in and do you have money for a down payment? If so, how much? Depending on that, there are additional loan programs out there that don't consider your income like DSCR loans.


     Stacy, we live in Missouri. We would most likely only have enough for a 3.5% or 5% downpayment.

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Robin Simon:

    Be careful with the people suggesting DSCR loans for this - DSCR Loans cannot be used for house hacking as they have to be pure investment property loans only (can't live in any of the units)


    Great to know. If we pivot to a SFH this may be an option.

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @John Warren:

    @David Lund not all lenders are created equally. Even though they have the same "tools" in terms of which mortgages they can use for FHA or conventional, some loan officers can find how to get to yes, and some only can find how to get to no. It is frustrating for sure, but keep looking. I went through multiple lenders when I started before, I found my current lender @Joshua Jones. He may be able to help you in MO. He was literally a game changer. 


     Great thank you so much, John!

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Lyndsay Zwirlein:
    Quote from @David Lund:

    Hello all,

    My girlfriend and I are trying to get a $250,000 FHA loan for a duplex to house hack. We didn't think it would be any issues at all because combined we make enough for that loan amount. After going through the process for pre approval today with a Mortgage banker for home loans they said since my income is a national fellowship stipend it cannot be counted AND my secondary source of income that I've had for 4 months also CANNOT be counted. This made only my girlfriend's income be eligible leaving us pre approved for $200,000, which is very disappointing and discouraging since there are very little duplexes in our area especially ones we'd want to live in for $200,00. This was a dream of ours for so long and any help or insight would be appreciated.


    We both have over 750 credit score and 0 debt.


    Thank you!


    Hey David! I would recommend having someone take a second look at the FHA option.

    Also as others have indicated, DSCR won't work since you're occupying part of it. For conventional multi family owner occupied, you can do up to 85% LTV. That could be another option if you are able to put 15% down.

    Happy to help if you have questions!

     Thank you for the suggestion, Lyndsay!

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Joshua Jones:

    Thank you @John Warren. @David Lund in terms of income whether it can be used or not, it depends. If a stipend is not likely to continue, maybe not. But if it is guaranteed, then possibly. With your part time income from 4 months ago that you started, how many hours are guaranteed? DSCR (debt service coverage ratio) loans might not work as i assume you are doing FHA for the low down payment. Feel free to private message me as well. When it comes to multi units, I handle close to a 100 a year for lending and know the rules and what we can and can not use. I am curious though how they came up with 200K? Did they take in the proposed rent for the potential duplex or not? Many lenders can not use that proposed rent if you do not have the history of receiving rent. However that is not the real guidelines. It's really looking at the whole situation. Don't be discouraged. Not all lenders are created equally. If they were, every lender and banker would do the same amount of business. I have 31 licenses and MO is for sure one of them. Feel free to reach out if you want me to look at it.


    I have the stipend for 2 more years after this school year (it has to be renewed yearly but that's basically a sure thing). With second source of income it is salary based so I receive X amount guaranteed every month.

    I'm not entirely sure how they got the $200,000. They did a 3.5% FHA loan and my gf and I both had high credit scores and no debt so that probably helped. They did not take in the proposed rent.

    0Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    3y

    @David Lund so it appears there is a lot of wiggle room then. Feel free to private message me and then we can go from there. 

    0Reply
  • Louis P Lessor
    Janesville WI · Member since 2019 · 55 posts · 36 votes
    3y

    @Grant Schroeder; he does a great job of finding ways to make things happen. 

    1Reply
  • Walter Correia
    Lender · Charlotte, NC · Member since 2015 · 124 posts · 22 votes
    3y

    @David Lund

    You can look into consumer non-DSCR loan based on your income. Feel free to contact me, perhaps I can help.

    0Reply
  • Grant SchroederPro Member
    Lender · OR ID AZ CA WA CO NV TN MT · Member since 2018 · 598 posts · 312 votes
    3y

    Thank you for the shoutout @Louis P Lessor! I appreciate you!

    [email protected]541-231-1256
    0Reply
  • Grace Maxwell
    Lender · Richmond, VA · Member since 2022 · 24 posts · 9 votes
    3y
    Quote from @David Lund:
    Quote from @Joshua Jones:

    Thank you @John Warren. @David Lund in terms of income whether it can be used or not, it depends. If a stipend is not likely to continue, maybe not. But if it is guaranteed, then possibly. With your part time income from 4 months ago that you started, how many hours are guaranteed? DSCR (debt service coverage ratio) loans might not work as i assume you are doing FHA for the low down payment. Feel free to private message me as well. When it comes to multi units, I handle close to a 100 a year for lending and know the rules and what we can and can not use. I am curious though how they came up with 200K? Did they take in the proposed rent for the potential duplex or not? Many lenders can not use that proposed rent if you do not have the history of receiving rent. However that is not the real guidelines. It's really looking at the whole situation. Don't be discouraged. Not all lenders are created equally. If they were, every lender and banker would do the same amount of business. I have 31 licenses and MO is for sure one of them. Feel free to reach out if you want me to look at it.


    I have the stipend for 2 more years after this school year (it has to be renewed yearly but that's basically a sure thing). With second source of income it is salary based so I receive X amount guaranteed every month.

    I'm not entirely sure how they got the $200,000. They did a 3.5% FHA loan and my gf and I both had high credit scores and no debt so that probably helped. They did not take in the proposed rent.

     You should be getting some credit for the future rent of the other unit. Did you ask the lender if taking you off the loan entirely would help? If you have some student loan debt (likely, given your field- really impressive!) then having you on the loan means counting your liabilities without having income to offset them, so your girlfriend may qualify for more on her own than both of you together. 

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @David Lund-  iask  your  loan person if a conventioanal loan  would allow  you to use your income ?    Is a  non occupant  co borrower  ( like a  relative/ parent ) an option ?

    0Reply
  • David Lund
    OP
    Columbia, MO · Member since 2022 · 122 posts · 66 votes
    3y
    Quote from @Dave Skow:

    @David Lund-  iask  your  loan person if a conventioanal loan  would allow  you to use your income ?    Is a  non occupant  co borrower  ( like a  relative/ parent ) an option ?


     Dave, thanks for the suggestion!

    1Reply
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