All Forum Posts by: Nessa Lyn

Well first of all an FHA loan only requires 3.5% down payment if you're living in the house, so your down payment on $850k would only be $29,750.

@Nessa LynYes, agreed that down payment would be about $30,000 whether you go Conventional (3%) or FHA (3.5%) on that primary residence. However, don't forget closing costs which could run between 3%-5% of the price. Could you rent out rooms in the home you inherited to help save for that first purchase?

@Nessa Lyn - if this were a multi-unit property (duplex, triplex) then the rental income (as determined by an appraiser) could be factored into your monthly income regardless of whether or not you have a history of receiving this type of income. However, if this is a 1-unit property then you are likely not going to be able to use income from the other bedrooms to help you qualify, unless this is something that you've been doing for the past few years. This is referred to as 'boarder income' and you generally need 2 years tax returns showing proof that you've been receiving boarder income, and you also need to prove that you are currently receiving boarder income. 

Are you worried that you won't qualify for this $850k home solely based on your household income? So you are wanting to use the potential income of the property to help you qualify?

I've had a situation similar to this. I purchased a house that I am renting-by-the-room. My lender wouldn't consider potential income when qualifying me for this house.

HOWEVER, he will consider the income of this property when I purchase my next property. So when he is calculating my Debt-to-Income ratio while I'm being qualified for the next house, he will see that all or some of my mortgage payment on the first house is covered by tenants.
I'm not sure if he will assume the market long-term rent income, or if he will actually look at the leases I have in place though.

But basically, I don't think your lender will consider un-proven income to help purchase this house. Once you've proven income though, the lender may consider it during the purchase of your next property.

Back when the earth was cooling and I was a loan originator, the questions asked for FHA loans was something like "what properties do you own" and what debts do you have.

That's because FHA is backed by the US Government (those of us who pay taxes). They want to know what your Debt to Income Ratio is and what risk they are taking on by lending you money.

I'd close on the FHA loan then I'd look into other loans. Because, lying on a federal loan application is a felony, not to put too fine a point on it. So, always disclose the truth. Just do things in order and you will be fine.