"Per Diem" truck driver pay and qualifying for a mortgage.

10 Replies

Im an over the road truck driver, and my company offers a "per diem" pay package. In this pay plan, a significant amount of my pay is paid as non taxed income. In the images below, ive included the documents they provided that shows how it works. They say that they can provide a letter to a lender that explains that my income is really higher than what will be shown on my w-2. My question is will lenders actually accept this while applying for an FHA or a conventional mortage? Is this scheme that my employer pulling even legal? Also I just began truck driving 6 months ago. Prior to that i worked as a server at a restaurant. Is there a certain amount of time i will need to have worked as a truck driver (2 years?) to qualify for an fha or conventional mortgage?


Originally posted by @Michael Hallahan :

Im an over the road truck driver, and my company offers a "per diem" pay package. In this pay plan, a significant amount of my pay is paid as non taxed income. In the images below, ive included the documents they provided that shows how it works. They say that they can provide a letter to a lender that explains that my income is really higher than what will be shown on my w-2. My question is will lenders actually accept this while applying for an FHA or a conventional mortage? Is this scheme that my employer pulling even legal? Also I just began truck driving 6 months ago. Prior to that i worked as a server at a restaurant. Is there a certain amount of time i will need to have worked as a truck driver (2 years?) to qualify for an fha or conventional mortgage?

FHA likes to see two years in the same industry or the same job. FHA will accept some pretty odd things (and it changes all of the time) so you'd have to talk to a mortgage broker for specifics. But generally, they want two years on the job, two years bank statements, two years of tax returns and a FICO score in at least the low 600's. If you are an employee they will take a letter from your employer, if you are 1099 they will want a Profit and Loss statement.

 

Per Diem is not considered income because it's an amount intended to cover meals, lodging and incidental expenses incurred by being away from home. Most don't spend it all so it goes in their pocket but it's not likely a lender will consider it to be an income source. If you keep good records of your expenses, you may be able to make an argument but most lenders have boxes to check and that probably won't fit into one of them.

The income will be taxed - just not as w2 income. But you will be taxed as a self employed person is my guess?  (Edit- i misread the document see below) 

I would call two people - a mortgage broker so you can fact find, and a tax person - so you can understand and prepare for any addtl taxes you might owe. 

I am editing my comment to say - you need to find out if reporting LESS INCOME is what you really want to be doing. It will make it harder to get a loan, and you will accumulate less social security - this matters! 

Well i was hoping a seasoned mortgage professional would weigh in, from my research online ive found the answer that a lender *may* decide to account for the per diem income, but I cant find a definite answer on what lenders do and for what programs. I'll get in contact with a lender and see what they say. I was hoping atleast someone could offer a recommendation of who to contact that works with this thing. Also the two years of working in the same position/industry seems ambiguous, im reading conflicting things on that when it comes to the FHA program.


So if any MORTGAGE PROFESSIONALS could weigh in, that'd be appreciated :). I've heard enough from, as we say in trucking, "truckstop lawyers" or in this case...  keyboard warriors? No that's too derogatory, sorry 🤣🤣.  I appreciate ya'lls help but im waiting for an acutally LO/Underwriter to weigh in here.

Originally posted by @Michael Hallahan :

Well i was hoping a seasoned mortgage professional would weigh in, from my research online ive found the answer that a lender *may* decide to account for the per diem income, but I cant find a definite answer on what lenders do and for what programs. I'll get in contact with a lender and see what they say. I was hoping atleast someone could offer a recommendation of who to contact that works with this thing. Also the two years of working in the same position/industry seems ambiguous, im reading conflicting things on that when it comes to the FHA program.

So if any MORTGAGE PROFESSIONALS could weigh in, that'd be appreciated :). I've heard enough from, as we say in trucking, "truckstop lawyers" or in this case...  keyboard warriors? No that's too derogatory, sorry 🤣🤣.  I appreciate ya'lls help but im waiting for an acutally LO/Underwriter to weigh in here.

I was a loan officer before I started investing full time. Your answer is that you need to present all of your documents to find out. Since you have been at the job for six months you have little likelihood of getting an FHA loan until you have been at the job two years. So, It is a moot point (non issue until you hit two years). Asked & Answered. End of story. Sorry, but FHA has rules.

With what you present as weekly income of $1,200 times 52 weeks is $62,400 divided by 12 months is $5200 monthly and you would qualify for about $1,820 per month for principal, interest, insurance and taxes and PMI for FHA and would be about $280,000 home with 3.5% down or about $9,800 down, at 4% interest on a 30 year fixed.

You should look into Hard Money or better yet Private Money instead.

Originally posted by @Mike M. :
Originally posted by @Michael Hallahan:

Well i was hoping a seasoned mortgage professional would weigh in, from my research online ive found the answer that a lender *may* decide to account for the per diem income, but I cant find a definite answer on what lenders do and for what programs. I'll get in contact with a lender and see what they say. I was hoping atleast someone could offer a recommendation of who to contact that works with this thing. Also the two years of working in the same position/industry seems ambiguous, im reading conflicting things on that when it comes to the FHA program.

So if any MORTGAGE PROFESSIONALS could weigh in, that'd be appreciated :). I've heard enough from, as we say in trucking, "truckstop lawyers" or in this case...  keyboard warriors? No that's too derogatory, sorry 🤣🤣.  I appreciate ya'lls help but im waiting for an acutally LO/Underwriter to weigh in here.

I was a loan officer before I started investing full time. Your answer is that you need to present all of your documents to find out. Since you have been at the job for six months you have little likelihood of getting an FHA loan until you have been at the job two years. It is a moot point. Sorry, but FHA has rules. You should look into Hard Money or better yet Private Money instead.

I appreciate your help. How long ago was it that you were a LO? The FHA program changes. Ive read conflicting/ambiguous things on this topic.

 

Originally posted by @Michael Hallahan :
Originally posted by @Mike M.:
Originally posted by @Michael Hallahan:

Well i was hoping a seasoned mortgage professional would weigh in, from my research online ive found the answer that a lender *may* decide to account for the per diem income, but I cant find a definite answer on what lenders do and for what programs. I'll get in contact with a lender and see what they say. I was hoping atleast someone could offer a recommendation of who to contact that works with this thing. Also the two years of working in the same position/industry seems ambiguous, im reading conflicting things on that when it comes to the FHA program.

So if any MORTGAGE PROFESSIONALS could weigh in, that'd be appreciated :). I've heard enough from, as we say in trucking, "truckstop lawyers" or in this case...  keyboard warriors? No that's too derogatory, sorry 🤣🤣.  I appreciate ya'lls help but im waiting for an acutally LO/Underwriter to weigh in here.

I was a loan officer before I started investing full time. Your answer is that you need to present all of your documents to find out. Since you have been at the job for six months you have little likelihood of getting an FHA loan until you have been at the job two years. It is a moot point. Sorry, but FHA has rules. You should look into Hard Money or better yet Private Money instead.

I appreciate your help. How long ago was it that you were a LO? The FHA program changes. Ive read conflicting/ambiguous things on this topic.

I was a loan officer before I started investing full time. Your answer is that you need to present all of your documents to find out. Since you have been at the job for six months you have little likelihood of getting an FHA loan until you have been at the job two years. So, It is a moot point (non issue until you hit two years). Asked & Answered. End of story. Sorry, but FHA has rules.

With what you present as weekly income of $1,200 times 52 weeks is $62,400 divided by 12 months is $5200 monthly and you would qualify for about $1,820 per month for principal, interest, insurance and taxes and PMI for FHA and would be about $280,000 home with 3.5% down or about $9,800 down, at 4% interest on a 30 year fixed.

You should look into Hard Money or better yet Private Money instead.

I've found that the most efficient use of time for wonky scenarios like this is to collect all income docs and shoot it over to an underwriter or two.

I believe I know the answer, I'd say I'm about 90% certain (not a lot of truck drivers are in the market to become homeowners in the SF Bay Area, so I'm thinking of other professions w/ per diem for my mental examples). However, if I say "no" when the answer should be "yes," then you don't become a homeowner when you otherwise could. If I say "yes" when the answer should be "no," then you might lose an earnest money deposit.

A few of the banks I work with (you need to find someone in NC, I'm in CA) will review income docs as a "address to be determined" scenario, and the decision (both the yes/no, and the income per month calc) is binding on that underwriter, they can't go back in once the file is "live" and re-calculate and come to a different conclusion unless the updated income docs are also different. That's what you want here, not my or anyone else's 90%.

If you get lucky someone will pop in who is the "truck driver's mortgage guy" in their market (like how I'm the "landlord's mortgage guy" in the East Bay, how someone is the "stated income HELOC gal" in every market, you get the idea), that person could answer with >90% certainty (& by all means give that gal or guy a call if licensed in your market), but if not then I'd suggest the above.

Originally posted by @Michael Hallahan :

@Chris Mason So you are saying it's a 90% chance they wont accept it?

 No, I'm saying that I'm only 90% sure I know the answer to your question. Which means, IRL if you are my client, I'm collecting your docs and sending them off to underwriting, and not telling you which way I'm 90% sure until I have that answer back.

https://en.wikipedia.org/wiki/Type_I_and_type_II_errors

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