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.

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. 

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