FHA First Time Buyer

[Erik Nowacki]

Hi Everyone! I'm looking for some sage advice for my son. I'm trying to coach him into a house hack situation, with an FHA first time homebuyer loan. Junior has worked since early 2016, received his first W-2 and filed his tax return this month. The bank told him he has to work 2 years before they will consider him for the FHA first time homebuyer program. My question to the collective wisdom of the BP forums is: Is there a way to get the FHA first time homebuyer loan without a full 2 years of work history? If so, what hoops does he have to jump through to get there? Are there differences between lenders, or do they all apply the same guidelines? Can he apply for an exception from the guidelines? I'm grateful for any suggestions you may have. Happy Investing! Erik

[Jeff Dulla]

Hi Erik,

Is there a certain draw to FHA financing? Conventional guidelines and down payment requirements have loosened up a bit. If you're attracted to the low down payment structure of FHA, your son could obtain a conventional loan, with as little as 3% down that would cost him less over the life of the loan (mortgage insurance premiums are generally less with conventional, and ultimately cancel once enough equity is obtained).

Either way, if your son was in school prior to working this job, and the job is full-time salaried, a lender without overlays should be able to use his current income to qualify him.  The history should not come into play.  

I've attached a snippet from AllRegs, which publishes guidelines for Fannie, Freddie, FHA, etc. If the lender you're working with does not have any overlays, they should follow the attached guidelines for determining income.

Hope this helps!

Jeff Dulla