August 17, 2015
We’ve written in recent weeks about the process of verifying income for an FHA home loan–the nature of your employment, additional income, and other financial factors that might contribute to your debt to income ratio are required to get scrutinized by the lender.
The lender’s process for verifying income is spelled out in HUD 4155.1 Chapter One Section B, but there’s one part of the rules we haven’t covered in our other blog posts–the Verification of Deposit requirement.
Chapter One Section B states that the lender must get documentation in writing for all “assets to be used in qualifying” for the FHA mortgage. Borrowers should expect to furnish verification in writing for the last three months worth of qualifying at a minimum.
The borrower can provide either a written Verification Of Deposit, or an alternative form of documentation as described in Chapter One:
“… original asset statements covering the most recent three-month period. Provided that the asset statement shows the previous months balance, this requirement is met by obtaining the two most recent, consecutive statements.”
The lender also has an alternative: “If a written VOD is not obtained, the lender may obtain a statement showing the previous months ending balance for the most recent month. If the previous months balance is not shown, the lender must obtain statements for the most recent two months to verify that there are sufficient funds to close.”
This paperwork would supplement the other required documentation such as a Verification Of Employment and the most recent pay stubs required by the lender. The pay stubs must show, “…year-to-date earnings of at least one month, and one of the following to verify current employment:
–a written VOE verbal verification of employment, or
–electronic verification acceptable to FHA.”
As you can see, FHA loan rules demand in-depth documentation of income and employment–one reason why borrowers are encouraged to begin preparing very early for an FHA mortgage loan application. You’ll need to gather your documents and make sure you have the required paperwork–including proof of a Social Security Number.
Do you have questions about FHA loans or FHA refinance loans? Ask us in the comments section. All comments are held for review and may not appear on the site right away.
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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