Advice for applying FHA loan with credit no debt average income

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Advice for applying FHA loan with credit no debt average income

Precious Thompson
Real Estate Agent · Philadelphia, PA · Member since 2013 · 310 posts · 34 votes

I plan on applying for a FHA loan in March ,2018 which will make 2 years verified w2 income working full time, i have over a 700 credit score and an income of about 1,700 a month no debt(i also plan to get another part-time job to help increase my monthly income). Any advice for applying and my chances of getting approved? In search of a duplex property as my first rental property; Emergency funds will be set aside as well (6 months rent).

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Michael Cohen
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
You're welcome. Unfortunately, the part-time income would not be allowed as qualifying income under FHA guidelines. FHA requires the borrower to have two years of an interrupted history of a secondary part-time job.
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  • Michael Cohen
    Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
    9y
    Precious Thompson based off what you're saying, your chances are 100% of being approved for an FHA loan, assuming there are no other crazy issues, like tax liens, nonpayment of taxes, etc... Your income amount, and corresponding debt to income, will determine how much your approved for.
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  • Precious Thompson
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2013 · 310 posts · 34 votes
    9y
    Thank you for the feedback. Michael Cohen
    0Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    @Precious Thompson

    You seem to have all the angels set! I would say just keep building your credit score up to above 740, but outside of that you should be good to go with low debt.

    The McKernan Group4.957 Reviews
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  • Michael Cohen
    Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
    9y
    You're welcome. Unfortunately, the part-time income would not be allowed as qualifying income under FHA guidelines. FHA requires the borrower to have two years of an interrupted history of a secondary part-time job.
    1Reply
  • Nicolaas W.
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    @Michael Cohen what strategies would you suggest for someone with similar income, and no debt, but that does NOT have a 2 year w-2 income?

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  • Michael Cohen
    Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
    9y

    @Nicolaas W. - that's actually a very difficult question to answer without any specifics.  Ultimately you must have 2 years of employment history, whether it's W2 or self-employed.  NOTE: college can often count as part of that history

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  • Nicolaas W.
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    @Michael Cohen Well my situation is that I am currently in an internship, and I should be walking away from it with about $25k in my pocket. I am a veteran and a college student, so I am using my GI bill to pay for school, which also includes a monthly Housing/living allowance. I was hoping to get an FHA, or 203K loan, using some of my money for a down payment for a home in my college town, and house hack. I would be giving that money up for a rental or apartment anyways. I could probably even find a college student willing to live there with me for cheap if they tolerate the construction.
    I want to have a general idea on what I am going to do about financing so when I really start hunting hard when I am getting ready to move back, I can take action.
    My father is on board, and willing to co sign on a loan, and provide some extra funds if needed, but ideally I would be able to do it myself. 

    I have been at my University for a year now, and I have been using the GI bill during that time.
    However when I was at my community college I paid out of pocket with money I saved up, because I have seen many veterans not plan their college career properly, and run out of GI bill funding before they are done. While at the community college I did do some part time work but not 2 years straight.

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  • Michael Cohen
    Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
    9y

    @Nicolaas W. - I commend you on your planning. You're right, most fellow service members do not have that much foresight.

    You're not going to like this answer, unfortunately: GI Bill won't be considered qualifying income either. You might have to try a portfolio lender for a bit until you can refi out of it into a traditional mortgage program once your income is established.

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  • Steve DellaPelle
    Rental Property Investor · Salem, NH · Member since 2016 · 460 posts · 276 votes
    9y

    @Precious Thompson We have very similar numbers and I was pre-approved for $400,000 on FHA. I was also able to bump this up to $425,000 just by simply requesting it. I closed a few weeks ago and had no issues from the lender. You should be good, just go find a lender for pre-approval!

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  • Nicolaas W.
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    @Michael Cohen, Well thank you for your service as well, and thank you for the insight. Looks like I will need to come up with a solid plan and get creative.

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