All Forum Posts by: Wencheur Antoin

Just to learn from Bria's question, Given that the 203k FHA loan is for SFH and small multifamily, the situation of having a quad and a SF under the same address does not make it over 4 units?

Hi Shane, I want to tell you something from my research because it seems that we've been doing the same thing when it comes to educating ourselves on RE.
Given that you already have 20k, which is around half of the down payment, try to leverage family and friends as private money lender in order to complete the down payment.

Second, depending on how long you had your primary, assuming that you did not cash out anything from the equity, you can try out this option ( no need to cash out all, just cash out the amount that you need to make this deal happen).

just my humble opinion based on what I have learned!

Quote from @Jason Wray:

FHA offers options for those who earn W2 or 1099 income and its a fairly easy process. The documents required would be last (2) year tax returns and copies of the last (2) years 1099 year end statements. Depending on how you file your income/losses they can look at your schedule C and average the last (2) years. Some expenses/deductions can be added back into the Net to hep but if you claim any "un-reimbursed" business expenses that's a total loss and cannot be added back into the Net.

If a person is overseas or out of the US working and does not claim US income/taxes it cannot be used. You can however use a DSCR loan if you want to buy an investment property and that program does not look at your income. Instead it looks at the properties rental income "Current or proposed" (Can be vacant) - goes off of appraisal 1007/rent schedule.

If you were out of the US working and own an LLC where money was deposited into a business checking account you can use a "Bank Statement" loan

Hi Jason,

I wanted to express my sincere gratitude for your detailed response. Your insights into the FHA loan process for both W2 and 1099 income earners have been incredibly valuable. I've taken the time to do further research, and your guidance has provided me with a solid foundation.

I particularly appreciate your explanation of the Debt Service Coverage Ratio (DSCR) loan option and the Bank Statement loan. Learning about these alternatives opens up new possibilities, and I'm grateful for the knowledge you've shared.

Thank you once again for your generosity in sharing your expertise. It's been immensely helpful.

Best regards,
Wencheur.

Quote from @Caroline Gerardo:

Your 2022 2023 IRS net bottom number is used. You can now file 2023 BUT the lender is going to require 2021 as we cannot get tax transcripts for 2023 (just yet if you file digitally it takes about 7 weeks to show). The averaged income for three years is used. You can use your CPA to write a profit and or loss for year to date 2024 and even 2023 but again it's the income After all your expenses for a 1099 employee. Most "independent agents" are a broker and they file schedule C not a 1099. 

American citizen working abroad- well are they still far away? FHA is for owner occupied. The employer has to translate into English any employment contract. Borrower will provide bank statements for past 26 months showing the deposits of claimed income, also translated. Would need letter from CPA as to why or how the income is not taxed in the US. Expats have to file. see here https://www.irs.gov/individuals/international-taxpayers/us-c...

So the forms had to be filed in the past to be verified. If never filed and they were supposed to file, cannot use as income.

Say the borrower was in college until 12/1/2023 and now they have a job w-2 in the line of work they graduated. Provide college transcript and degree; offer letter from job; copy of payroll check; deposited into bank account. 

All income has to be verified from source and often with two different types of verification.

Thank you for sharing these detailed insights on the loan verification process, especially for independent contractors. It's helpful to know that the lender typically relies on the IRS net bottom number from the most recent tax returns, and the use of averaged income for three years. I'll definitely keep in mind the timing considerations, such as the availability of 2023 tax transcripts.

Your explanation about the nuances for American citizens working abroad is enlightening. The requirement for translated employment contracts, bank statements, and a letter from a CPA adds clarity to the documentation process. The link to the IRS resource is appreciated as well.

Your mention of the verification process for a borrower transitioning from college to a W-2 job is valuable information. I genuinely appreciate your expertise and the time you took to provide such detailed information. It's an intricate process, and your insights are incredibly helpful.

Thank you once again for your guidance.

Quote from @Mackenzie Grate:

Hi! It is my understanding that they use your tax returns to verify your income. As an independent contractor, it definitely is harder to get any loan. But if you have filed taxes for the past 2 years, and have shown consistent proof of funds, I'm pretty sure they will work with you. In terms of the AWA Income declaration, you are falling into a common trap that many people fall into. Any income you don't declare on your taxes does not count as income when you qualify. It's that simple. You may have earned it, but if there isn't a paper trail and proof you paid taxes on it, traditional lenders won't be able to use it to help you qualify. A lot of small business owners face this challenge by utilizing tax strategies to reduce their tax burden...it catches up to them on the flip side though. It then makes it look like they earned way less in the eyes of the government. So keep that in mind as you plan and file taxes moving forward. You may have to use a different type of loan, which of course wouldn't have as many benefits as the FHA loan. But there are commercial loans, private lenders and worst case scenario, hard money lenders you can use.

Hope this helps a little bit! Good luck and don't give up. Where there is a will, there is a way!

Thank you so much for sharing your insights and advice. I truly appreciate your perspective on the challenges faced by independent contractors when it comes to obtaining loans.

Your caution about income declaration is well-noted, and I appreciate the reminder about the importance of maintaining a clear paper trail. I completely understand the potential pitfalls and will definitely keep it in mind as I plan and file taxes moving forward.

Exploring alternative options such as commercial loans, private lenders, and hard money lenders is a great suggestion.However, I think that the FHA loan is what would better fit right now.

Thank you once again for your valuable advice and encouraging words. I'll keep pushing forward and exploring all available avenues.

Quote from @Sloane Kraftsow:

Welcome to BP!

 Thank you Sloane!

Quote from @Benjamin Aaker:

Most of my investments are in Sioux Falls. I'm also taking a good look at Omaha. I'm a believer in investing locally. A 3 hr drive to Omaha is about the farthest I want to go. 

 Okay! I got it, Hope you keep doing well your investment.

Hello BiggerPockets Community!

I hope this message finds you well. I'm currently exploring the possibility of applying for an FHA loan and had a couple of questions, and I'm eager to tap into the collective wisdom of this fantastic community.

1. FHA Loan Eligibility for Independent Real Estate Agents:

- As an independent real estate agent working on a 1099 basis, I'm curious about the employment verification requirements for an FHA loan. Traditional guidelines often require proof of employment for the past two years with a steady income. How does this apply to real estate agents who operate as independent contractors rather than W-2 employees? Can independent agents qualify for an FHA loan, and if so, what documentation might be necessary to satisfy the employment verification criteria?

2. Americans Working Abroad and Income Declaration:

- Additionally, I'm wondering about the scenario where an individual is an American citizen working abroad and did not fully declare all of their income or any income at all, how might this impact their eligibility for an FHA loan? Are there specific considerations or steps that need to be taken in such cases?

I greatly appreciate any insights, experiences, or advice you can share on these matters. Your collective expertise is invaluable, and I look forward to learning from your experiences.

Thank you in advance for your time and assistance!

Best regards,

Wencheur Antoin

Hello BiggerPockets Community!

I hope this message finds you well. I'm currently exploring the possibility of applying for an FHA loan and had a couple of questions, and I'm eager to tap into the collective wisdom of this fantastic community.

1. FHA Loan Eligibility for Independent Real Estate Agents:

- As an independent real estate agent working on a 1099 basis, I'm curious about the employment verification requirements for an FHA loan. Traditional guidelines often require proof of employment for the past two years with a steady income. How does this apply to real estate agents who operate as independent contractors rather than W-2 employees? Can independent agents qualify for an FHA loan, and if so, what documentation might be necessary to satisfy the employment verification criteria?

2. Americans Working Abroad and Income Declaration:

- Additionally, I'm wondering about the scenario where an individual is an American citizen working abroad and did not fully declare all of their income or any income at all, how might this impact their eligibility for an FHA loan? Are there specific considerations or steps that need to be taken in such cases?

I greatly appreciate any insights, experiences, or advice you can share on these matters. Your collective expertise is invaluable, and I look forward to learning from your experiences.

Thank you in advance for your time and assistance!

Best regards,

Wencheur Antoin

Quote from @Benjamin Aaker:

House hacking is not a way to get cash flow. It's a way to live in a place rent-free (usually) while building equity. Evaluate the deal by comparing it to what you would be paying should you buy a SFR as a primary residence. You may still have to pay some out of pocket to do a house hack, but it should be much less than what you would have had in a primary residence. Add to that the equity build in a 4-plex and you should have some nice cash when you refi. If this is true for your deal, then you should probably take it.

 Your perspective is just amazing!