How, and When, Exactly, is Income Determined?

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  • #49456

    So after ATD I realized that the Counselor and Underwriter were not using our full Gross Income as I had expected. It looks like they were using Box 3 from our W2s? Assuming we apply in October, will those W2s be used again, or will predictions be made based on current pay stubs? We are currently at 79%, waiting with bated breath for the new Median Income numbers, and trying to gauge how our pay increases will land us. So stressful!

    #49464
    Peapod0609
    Member

    I am in the EXACT same boat as you as for wondering how they determine income, and also wondering when the new median income numbers will be coming out.

    If you use my wife and I’s full gross income, I think we are at like 82-83% of the median income in the MSA we wish to purchase in (which is listed as an MSA that is compatible with the new BOA grant that lowers your interest rate by 1%). But if you go by adjusted gross income, or say Box 3 of the W2 as you said, we are well under, like in the 74% range. I am also facing a possible promotion this year, so that could further push us out.

    But I have not gotten a great answer on this, either. I have asked many times here, made a thread about it even, and I asked our counselor during our intake session a few weeks ago, and I still have no idea how exactly income is determined.

    • This reply was modified 1 year, 4 months ago by Peapod0609.
    #49466
    TTrumble
    Member

    Hello BakerTheBaker,

    We never “predict” income and only work with proven current numbers, and your application will be based on the affordability determined at qualification. This being the case, you should have no issues with the 80% of median income threshold, since the new median income figures will certainly go up as they do virtually every year. You really have nothing to be stressed about.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #49474

    Thanks so much @ttrumble ! That was my hope as well. Like @peapod0609, my promotion and commission growth was making me nervous.

    #49483
    Peapod0609
    Member

    In that case, I hope they use primarily our 2018 W2 information to qualify us, as that would put us under the threshold for the 1% lower interest rate.

    #49837
    msrb8408
    Member

    @ttrumble, what income do they use to determine income. Is it my current gross or is it the adjusted gross income from my w-2 / taxes?

    #49838
    Nelsont
    Member

    They don’t use your W2 to qualify you based on income…The W2 is to verify your income is stable and legitimate. Your paychecks are what determine your income level for qualification.

    #49851

    @nelsont Are you sure about that? That’s definitely not how it worked when I was at ATD. They wanted the W2s for qualification and the pay stubs to ensure income remained the same.

    #49856
    living20057
    Member

    Doesn’t it also depend on if the W2s are from the same employer? My last two years of tax returns are less than what I make now. My current position I started in Nov. My tax return didn’t reflect my current income. They went with my pay stubs

    #49857
    Nelsont
    Member

    I have been in my current job with a new employer since January and I am closing on a house next week that I would have no possible way of qualifying for if my 2018 W2 was used to determine my max PITI.

    #49877

    @Nelsont I think I see our miscommunication here.. we’re talking about qualifying for Priority status with NACA, not for the amount of the loan. You’re absolutely right, paystubs are used for verifying your income for the payment/loan amount. When threads are talking about Median Income, we’re talking about qualifying (or not) for Priority status with NACA.

    #49878
    Nelsont
    Member

    Gotcha! Sorry about that!

    #49957
    Klassy
    Member

    They used the amount confirmed by my employer for the bank app.

    #49975
    rbm2kid
    Member

    @ttrumble our situation is a little different but on the same vine. My husband has a base salary plus he makes commissions. His commission is not guaranteed every month. So he received two good commission checks April and May but nothing in June and July but naca only looked at April and May so now our income is “predicted” to be over the 80% MSA. I have reached out several times asking that they recalculate our income because it caused delays with bank app and grant. But they have ignored us. Even while signing bank app I brought up that his projected income was wrong and they just said oh ok and moved on. Will the bank do their own assessment or are we just screwed? If you could @ttrumble give me a little clarity that would be great!

    #49976
    Nelsont
    Member

    The bank will do their own assessment. They will request copies of your statements and notice the “missing” income.

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