FHA loan qualifications and income sources

4 Replies

So I'm really confused about how to qualify for FHA financing. Everything is so vague and obscure when it comes to mortgages.

Here's my question:

It's my understanding the debt limit is 46.5% on the front end and 55% on the back. Does the income they use come from the prior years tax return or the current year? 

I purchased 2 properties in September of last year. I didn't make much in rent and had a lot of deductions for repairs and such. My income last year was 70,000 with and agi of 52000 after losses. 

This year I got a raise and I also will have significant rental income. 

My income from my job will be about 91,000 this year. I have more than 80% equity in my 2 properties so it's my understanding the FHA counts 75% of your stated lease towards income. So my second question is, what is my max payment I can qualify for?

Property 1 purchased for 180k, appraised for 300k. Rent roll is $2745/mo

Property 2 purchased for 215k, appraised 300k. Rents $3200/mo

So my monthly debt payments are 

Student loans 600/mo

Car payment 361/mo

Mortgage 1 $1530

Mortgage 2 $1350

What will I qualify for roughly???? Thanks guys!!!

@Jim Lou

Hello Jim,

Anytime you're calculating your DTI you're also going to need to know the following:

Taxes, insurance and since you own investment homes now your income is going to be calculated off your Schedule E.

Take line 21 and then add back 18,16,12 and 9

divide that number by the fair market rental days ( top right of your schedule E form ) and this will give you your rental income.  Since you just received a raise you would need a pay-stub to figure out your current wage earner income.

I highly recommend getting a really good loan officer or broker to assist you in this calculation.  It's really not as easy as it seems.

Shaun Weekes, Innovation Lending Solutions | [email protected] | 949‑610‑3126 | https://www.facebook.com/Innovation-Lending-Solutions-Inc-261955880814516/ | CA Agent # 0L51686

cheers to you Jim! Hopefully one day I'll be in your position lol I hope you get qualified for your dream house!! Although if those properties were paid off you would be approved for a monthly mortgage of Atleast like 4k and that's a lot of house. I hope when I'm in your position that I actually wait until my rental properties are paid off- until I search for a dream house that my tenants are paying for.. goodluck man!!

Originally posted by @Shaun Weekes :

@Jim Lou

Hello Jim,

Anytime you're calculating your DTI you're also going to need to know the following:

Taxes, insurance and since you own investment homes now your income is going to be calculated off your Schedule E.

Take line 21 and then add back 18,16,12 and 9

divide that number by the fair market rental days ( top right of your schedule E form ) and this will give you your rental income.  Since you just received a raise you would need a pay-stub to figure out your current wage earner income.

I highly recommend getting a really good loan officer or broker to assist you in this calculation.  It's really not as easy as it seems.

hi Shaun. Those mortgage figures included tax and insurance. Approx 3 k tax and 1k insurance on each house annually. My schedule e only included October-dec of rental income in 2014 bc I just purchased the homes.