Articles Tagged With: Commission Income

May 13, 2015

FHA Loan Rules For Commission Income: A Reader Question

A reader asks, “With commission income can a person be at one job for about a year and then move to a different employer but same line of work and still commission type pay and be there for a year qualify? Can the 2 years be from different employers?” This scenario would be handled on a case-by-case basis by the lender for several important reasons. The lender will need to determine if the commission income is likely to continue, for starters, and also insure that the amount of commissions has not decreased. FHA loan rules in HUD 4155.1 state: “Commission income showing a decrease from one year to the next requires significant compensating factors before a borrower can be approved for the loan. A borrower whose commission income was received | more...

April 14, 2015

FHA Loan Rules For Commission Income: Another Reader Question

By Joe Wallace

A reader asks, “What if a person went from a commission based job as a loan officer to a salary plus commission job as a Mortgage Loan Manager? Would the salary still be averaged over 2 years?” This question is in reference to an earlier post we did back in 2013, which was titled, “FHA Loans and Commission Income: A Reader Question”. In that blog post, we answered a reader who asked us, “Is it true that if you work in a job where your pay is based on commission you have to be with your current employer for at least one year to obtain a FHA loan, even if your prior job was in the same line of work and was also a commission paying job?” The answer we | more...

April 2, 2015

Commission Income And FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “I made 41000 in 2013 and 65000 in 2014 I am on pace to making over 100000 this year. How will they calculate my income for an FHA loan. I am a saleried and I get commission.” The participating FHA lender is required to calculate the applicant’s income and verify that it is likely to continue–not all income can qualify to be used in figuring out the borrower’s debt-to-income ratio, only “verifiable income”. Commissions can and often are counted as verifiable income for the purpose of FHA loan approval, but that income must meet specific criteria. Borrowers who earn commission must have, in general, been earning the commission for a year or more. The FHA loan rules listed in HUD 4155.1 explain such requirements for verifiable commission | more...