Income qualifying guidelines for mortgage financing part 2

Posted on Sep 21, 2017 in Financing, Income, MARK WELLS' BLOG | Comments Off on Income qualifying guidelines for mortgage financing part 2

Income qualifying guidelines for mortgage financing part 2

Various types of income are considered differently when determining whether or not a borrower qualifies for a loan. This column is the second in a series of three in which Mark Wells of Preferred Financial Services explains qualifying rules that apply to income from different sources.

I am a new pastor and my church gives me a housing allowance, a health insurance allowance, and expense allowance and a small salary.  Am I restricted to the salary for qualifying?  As discussed last week, many non-salary types of income can be counted only if they have been a part of your compensation for at least two years, and must be averaged over the two-year period. Happily, pastors are in a category all their own, and can count their “total package income” with all allowances, even if they have not been at the church for two years.

I work on my job through a temporary employment agency.  Can I qualify for a loan?  Temporary employment income is not an allowable income, so you would not be able to qualify until you are on a full time job. However, once you are full time, there is no waiting period—you could apply for a mortgage right away.

I work through a staffing agency for my job.  Is that considered “temporary”?  This is a tough one and there are no definite answers.  As more and more industries have moved to this arrangement, lenders have tried to respond accordingly. The rule of thumb is that if the use of staffing agencies is “normal” for your profession, then you will probably be OK.  Engineers, and IT specialists are common examples, and are generally approved. Other professions are more difficult to qualify. It helps enormously if you have been under the staffing agency employment for several years, even if you have been assigned to different companies by that staffing agency.

I own 20 percent of the corporation I work for. Am I considered an employee or am I self-employed?  Technically, you are an employee. If you own 25 percent or more of the corporation, then you would be considered self-employed.

So do I count my W-2 wages as my qualifying income, or can I use the profit from the corporation as my income?  For that answer, as well as for all self-employed scenarios, you will have to wait for next week’s column, where we will cover this in detail.

I welcome any comments or questions and can be reached at (864) 235-9596 or via email at Mark@TheGreatestRates.com.

Or Text Me Now! 864-430-4856.

Next week: Qualifying rules for self-employed borrowers.