Proof of income

[Chris Duzan]

I'm still in the learning process of REI and have been reading a lot of books and blogs lately. While reading about qualifying for loans recently I read that you must be able to show at least 2 years of employment. I'm assuming this is for conventional loans but that was my plan for my first investment. I just graduated college and and started working full time so does that mean I have to wait 2 years before I can get a loan? I know there are alternatives like creative financing and partnering with someone that has the money, but is there any way to still get and FHA loan or conventional mortgage? I've heard it's harder to get these kind of loans as you get more properties so I wanted to get one now while it's still kind of easy. Thanks ahead of time for any replies. And sorry for the longwinded question, I swear it started out as a simple question in my head and then it just grew.

[Joseph Zanazan]

Sounds like you have a pretty good idea of all the different methods of financing that are available to you. Whats important to understand about these options are the different hoops you need to jump through to obtain the financing you desire. To answer your question, conventional and FHA loans both operate under the parameters set forth by Fannie Mae and Freddie Mac. When reviewing your application, besides how much money you make, your banker and underwriter will take into consideration how and where this income is generated from. Whether you're a wage-earner receiving a W2 at the end of the year or you're 1099'd, each criteria comes with its own set of guidelines and conditions. Although its always recommended to provide documentation verifying the history of a two year period of income, this particular guideline isn't one that's set in stone with no possibility of exception. Income that has been received for a shorter period of time may be considered acceptable as long as the borrower's income & employment profile demonstrates compensating factors to reasonably offset the shorter income history. If you're relying on overtime or bonus income for qualifying purposes, make sure you have at least 12 months under your belt to be considered stable.