What kind of income is allowed and needed for a FHA, VA, USDA and Fannie Mae Mortgage Loan Approval in Kentucky?


Income and your job history  plays a significant role when applying for a mortgage loan and getting approved for one for Kentucky Homebuyers . Mortgage Underwriters from FHA, VA, USDA and Fannie Mae  must follow both Fannie Mae  and agency guidelines when it comes to documenting and calculating qualifying income for a loan transaction. Income guidelines may vary slightly depending on the loan program and the borrower’s employment profile. Below are some general tips for W2 income.
Documentation that may be required
  • Paystub with year to date gross earnings
  • At least 1 year’s W2
  • Verbal or full VOE
Base Pay
  • Salaried and fixed hourly income is calculated by averaging the gross year to date income
  • Variable hourly income is calculated by averaging 12 month history
  • Commission and tip income is calculated by averaging over 24 months
  • No transcripts are required for salaried, hourly, or less than 25% commission W2 income borrowers
  • Unreimbursed expenses do not have to be deducted from the gross pay for salaried, hourly, or less than 25% commission W2 borrowers
Overtime, and Bonus Income
  • Overtime and Bonus can be used as effective income as long as it’s been received for 2 years and is reasonably likely to continue
  • Periods of less than 2 years may be considered as long as it’s been consistently earned over a period of at least 12 months and there are positive factors to offset the shorter history of receipt per underwriter discretion
  • Overtime and Bonus income must be documented by a full VOE
  • Declining overtime and bonus income cannot be used for qualifying income
Part Time Income
  • FHA requires a 2 year history of working multiple jobs
  • Fannie will allow less than 2 years as long as it’s been consistently earned over a period of at least 12 months and there are positive factors to offset the shorter history of receipt per underwriter discretion

 

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Company NMLS ID #1364
Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com
Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approvalnor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).

 

 

Kentucky Fannie Mae Mortgage Guideline Changes for 2015


Fannie Mae Kentucky Conforming Guideline Changes

updates

The following guideline changes are effective immediately for all Kentucky Fannie MaeF Conventional loans; however DU will not be updated to reflect these changes until August 15th 2015

Conversion of Currently Primary Residence

Requirements for conversion of a borrower’s current primary residence to secondary or investment have been removed. The converted residence will be treated like a normal second home or investment part with regards to Reserve requirements and use of Rental Income.

This removes all requirements related to the requirement of 30% equity in the converted property.

Stocks, Bonds, & Mutual Funds

  • 100% of the value can now be used. No reduction in value is required.
  • Documentation that the funds have been liquidated is no longer required when the value of the asset is at least 20% greater than the required borrower funds for down payment and closing costs.

Unreimbursed Employee Expenses

If a borrower qualifies using commission income which accounts for less than 25% of borrower’s annual income, base pay, bonus income, or overtime income:

  • Unreimbursed expenses do not have to be analyzed, deducted from qualifying income, or added to monthly liabilities
  • Voluntary deductions (e.g. union dues) do not have to be deducted from income or treated as a liability

If a borrower qualifies using commission income which accounts for 25% or more of their annual income, general unreimbursed business expenses must be deducted from the gross commission income.

If the borrower reports an automobile allowance as part of monthly income, the related expense must always be considered. The underwriter will determine whether automobile expenses will be deducted from income or included in the debt calculation.

Tip Income

In cases where a borrower reports additional “Unreported Tip Income” to the IRS beyond what is reported by their employer, this higher amount of tip income can be used as long as it can be verified with the last 2 years tax returns and filed Forms 4137 (Social Security and Medicare Tax on Unreported Tip Income).