Advice for Qualification

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  • #62397
    lnbteodoro
    Participant

    I would like to know if we are considered priority or non-priority. The handbook does not make it clear on how income is calculated to determine priority or non-priority. I understand that our income has to be below $79,200 in our MSA to be considered priority, but would like clarification on how our income is calculated. In 2018 my wife and I made ~81k. In 2017 we made ~75k. According to a forum read online our income is determined when you average the last 2 years W-2. If that is the case then we will be considered priority (Average is ~$77k). If the income is only based on last year then we are non priority.

    Assuming we are priority, is there a deadline date that we have to close by to not consider this year’s income? By the end of the year or by the end of next tax season? My understanding is that our last 2 years are averaged, which would make us priority. Also, that we would have to purchase by the end of tax season, April, in order to not have to supply this years W-2 or taxes. Please clarify this for me.

    My second question is regarding my wife and her pregnancy taking her out of work. My wife is due on March 11th and is scheduled to be out of work starting mid February, therefore she will not be able to provide paystubs starting mid February. We are looking at new construction which is estimated to be finished by the end of March. Will this affect us negatively being as she will not be receiving maternity leave pay? Would we have to close before that date or could we still get approved with her work history and close at the end of March or beginning of April?

    #62398
    Nelsont
    Member

    Your status is based upon current base gross salary from 2019 before taxes and all other things are taken out. They don’t need your w2 for that. They look at your most recent pay stubs to get your base rate whether salaried or hourly and use that to extrapolate yearly and monthly figures. This is how your monthly approved maximum payment is calculate. The w2 and tax transcripts are for verification of stability in income. They will average your w2s to determine status if your income is up and down. But if you are showing a steady increase consistent with cost of living or greater than they take the most recent. 2017 in your case may not be asked for.

    The deadline would have been December 31, 2018. As soon as you get that first paycheck with your new salary that’s your income they look at. They will almost certainly consider your income 2 to 3 times including up until the day you close so there’s no way around that. They will always ask for the most recent everything at every step in the process. So they may not ask for 2019 w2 right now but they definitely will in January/February when they start getting sent out. The whole idea is that every step along the way they want to make sure either nothing changes or you are improving your status. They will ask for everything up to the day/week/month at every stage.

    Possibly. If she is on maternity leave then she will need to get her employer to write and sign a letter on company letterhead that her job is guaranteed and will resume collecting paychecks at her set salary when she returns to work on a specified day. If she is not working at all then after about 2 months or so she will not be able to get qualified until a fresh 24 months of work history are under her belt…March 2022. In that case it would be better to not have her go through qualification. The downside is in that situation unless she is collecting paychecks her income cannot be used toward your approved mortgage amount but her debt will be included in yours.

    Also something to keep in mind, unless you are positive you can be approved for a conventional loan today from any bank in the country with 10-20% down payment then you might be looking at up to 6 months before you can qualify and put an offer on a house.

    #63151
    natevsclarrisa
    Participant

    My Question is, does both husband and wife need 24 months work history because I have 2 years + work history
    My wife has 15 months work history, one W2 and one 1040 transcript until taxes are filed in Feb 2020
    Can she NOT be on the mortgage and her income considered towards our mortgage amount?

    Second Question is, If she can not be on the mortgage with her current credentials, then do we discount her all of her income that flows into the same checking account as mine does especially when calculating SHOCK PAYMENTS?

    #63158
    Nelsont
    Member

    All members must have 2 years of work history. Your options are to wait until September 2020 (9 months) until your wife has 24 months of work history or to exclude her in the qualification altogether. If you exclude her then her income cannot be used to help qualify you BUT her debt will certainly be included in yours. I think the best thing to do, if you are not in a rush to buy a house, is to go through the process now with both you and your wife and by the time your wife has 2 years of work history you will be more ready than ever and everything will go quickly you will have less debt and be approved for more house.

    Yes. Her income is discounted. Her debt is not. Meaning student loans credit cards and anything else you do not have your name on now becomes your financial responsibility in the eyes of the bank. The reason being is that if your wife loses her job are you going to make her go broke while all of your expenses are paid? probably not. You will probably be living at least for a short time in a house with only your income. That’s what the bank is going to qualify you on if she is left off the mortgage and does not go through the process – the idea that you have to provide 100% of the finances. (Banks will take worst case scenario to play it safe. They figure that way you will most likely be staying ahead of the curve.)

    Her income and savings can, however, be put toward interest rate buy down if you choose to exercise that option.

    • This reply was modified 11 months, 3 weeks ago by Nelsont.
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