All Forum Posts by: Reid Chauvin

For the FHA Self-sufficiency test, the rental income # includes the appraiser's estimate of fair market rent for ALL units (including the one you will occupy), minus the greater of 25% OR the Appraiser's estimate for vacancies and maintenance. This amount cannot be less than the Principal, Interest, Taxes and Insurance for the property. @Steven DeMarco @Tim Herman @Chris Davidson

@Harry Shmelts - The only downside is the additional monthly cost of borrowing the down payment assistance funds. As long as the Down Payment Assistance doesn't result in your monthly mortgage payment being too high to be feasible, then holding on to some savings for reserves/repairs via DPA is a great option. Feel free to reach out if you want more information. 

@Adam Wayne - you do not need to wait 2 years to be able to use rental income from this current property when you are purchasing a new primary. When under contract for the next property, you will need to provide your lender with a signed lease for current property. 75% of the rental income from the lease will be counted towards your debt-to-income ratio. 

@Adrian Barrera - if your current company will not allow you to work remotely, then it'd probably be best from a timing perspective to line up a job in the city you want to live in before finding the house. You don't necessarily need to have started the new job before offering on the house, or even prior to closing on the house, but you will at the very least need a job offer letter from the new company and a start date that is close to the closing date. 

If you opt to find the house first, it might be tough to close within the average 30-day window that sellers agree to, not to mention most lenders will be unwilling to provide a preapproval letter for you without any income. 

@Bob Daniels - Jay covered the 411 on using rental income. Perhaps you can find someone to sign a lease with a move-in date once repairs are finished? Short of that, other options I can think of off the top are 1) pay off debts to lower Debt To Income, 2) find cheaper homeowner's insurance, 3) pay for Mortgage insurance upfront instead of monthly or 4) large down payment. Hopefully your lender can help advise you on these options. 

@Josh Terrell - I don't think you necessarily need to look too far outside BHam, like others suggest. I'm sure there are deals to be had in your area. Perhaps you need to shift your strategy, whether that means finding an off-market property or a value-add opportunity, or doing a short-term or mid-term rental instead of a long-term rental. House hacking your first property is a good way to get in the door with lower interest rates, lower cash out of pocket, and maybe you rehab the home while you're in there so you can rent it for more when you move out. 

@Savannah Pratt - this situation does not violate any FHA rules since you plan to occupy the property upon purchasing it. FHA rules do not change from lender to lender, (although some lenders may interpret the rules a bit differently). I know you did not ask this, but FYI, you cannot use rental income to help you qualify for the loan if it's a 1-unit property.

@Marijo Holt - there are down payment assistance programs out there that allow you to get a second mortgage to help cover the upfront costs of the mortgage you use to buy the house. The money is not free though, and you do pay it back over a period of time. Speak with a lender who offers such programs. Feel free to reach out if I can be of further assistance! 

A product of the administration's drive to expand homeownership to underserved communities. Seems pretty heavy-handed to me with this notion that you need to penalize one group to raise up another. I worked at Fannie Mae for a few years (during which happened to be under the previous administration) and the efforts to expand homeownership seemed much more tactful and balanced. Hopefully will revert back to a more targeted and nuanced approach with future administrations.

Hi @Jake S. - I am familiar with Fannie's trust income guidelines and am licensed in AL (have assisted several BP members in that state). Feel free to reach out!