August 3, 2015
When you apply for an FHA home loan, what is your lender going to require of you besides the information you put on the application itself?
Some requirements may vary from lender to lender, but in general you will need to be prepared to furnish bank statements, tax data, and information on any additional sources of income you want to be counted along with your primary earnings.
The lender will ask for tax data for a variety of reasons, but the tax data is especially important if you are an independent contractor, freelancer, or small business owner.
Your bank statements can also be important–the lender may require two months or more in order to get a more complete picture of your spending habits.
Your income needs to be verifiable–any part time income will also be scrutinized. Some part time income may not be able to be counted as part of your verifiable income if you haven’t been on the part-time job long (depending on lender standards this may vary) or if the income is sporadic, such as sales from eBay or Etsy.
These things can be approved or denied in many cases at the lender’s discretion. FHA loan rules allow the lender to exercise discretion and doesn’t micromanage the income verification process–there are general FHA loan rules in this area, but the lender’s standards also play an important role.
Where taxes are concerned, your lender may tell you that the most important amount is the dollar figure you report to the IRS after all deductions–if you are concerned about this area, discuss it with the lender to find out what standards apply to you and how your reported income affects your debt-to-income ratio calculation.
It’s important to take a good look at your finances, your tax data, and your spending activity long before you apply for an FHA mortgage. Doing so will help you approach the loan process more fully informed.
Do you have questions about FHA loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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