April 7, 2015
A reader asks, “I have a notarized agreement with the father of my child to receive a total amount of cash distributed in two or more deposits during the month in my account.”
“I receive it on Cash and then I deposited in my bank account. My lender deny me the loan because they need to see the whole amount agreed in only one single deposit. Is that true? How can I properly prove and evidence this income?”
It’s important to remember that FHA home loans have two sets of standards which must be followed–basic FHA loan guidelines are one, and participating lender standards are another. Depending on the laws of your state, lender requirements, and other factors, a borrower may find questions such as these tough to get a clear answer on.
Why? In this particular case, the lender is viewing a borrower’s income, part of which is paid in cash.
The borrower tells the lender this income is from a certain source, but the lender has no way to verify this with a paper trail such as a check stub or other documentation that the payment is being delivered based on the agreement mentioned in the reader’s question.
That means the only evidence a lender might have to prove the payment is what it is supposed to be is to match the dollar amount in the agreement and the amount of the deposit.
Unfortunately for the borrower, the deposit amounts don’t match and the lender is back to square one on how to document this type of income.
Is the income stable, reliable, and likely to continue? Those are three very important questions the lender must ask about all income sources.
In this case the borrower would need to ask the lender for advice on what it might take to get this income verified, whether that’s by agreeing to a consolidated payment that occurs once per month and matches the amount spelled out in the agreement, or by some other means.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review.
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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