One frequently asked questions about FHA home loans involves
government benefits and/or government assistance payments. Can these
income sources be used for the purpose of getting an FHA guaranteed home
loan?
Under the right circumstances, the answer is yes. It’s not automatic–the lender must verify the source of the income and also determine how long that income will last.
According to HUD 4155.1 Chapter 4 Section E, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.”
Borrowers aren’t simply out of luck if that income will not last for three years; it can’t be used as income, but it can be considered in other ways according to the FHA loan rulebook, which specifically says, “If the income will not be received for at least three years, it may be considered as a compensating factor.”
Some borrowers want to know if unemployment benefits are included in this set of rules, but there are separate guidelines for unemployment found in HUD 4155.1 Section E, which says “Unemployment income must be documented for two years, and there must be reasonable assurance that this income will continue. This requirement may apply to seasonal employment.”
What about VA benefits for service-connected disabilities? Does the FHA recognize this type of income?
According to the rules, “Direct compensation for service-related disabilities from the Department of Veterans Affairs (VA) is acceptable income for qualifying, provided the lender receives documentation from the VA.”
However, FHA loan applicants should know that GI Bill housing payments are not considered acceptable, which may have a lot to do with the nature of such benefits–they are only available while school is in session and eventually expire within a set number of months–therefore such payments would not be considered “likely to continue”.
Under the right circumstances, the answer is yes. It’s not automatic–the lender must verify the source of the income and also determine how long that income will last.
According to HUD 4155.1 Chapter 4 Section E, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.”
Borrowers aren’t simply out of luck if that income will not last for three years; it can’t be used as income, but it can be considered in other ways according to the FHA loan rulebook, which specifically says, “If the income will not be received for at least three years, it may be considered as a compensating factor.”
Some borrowers want to know if unemployment benefits are included in this set of rules, but there are separate guidelines for unemployment found in HUD 4155.1 Section E, which says “Unemployment income must be documented for two years, and there must be reasonable assurance that this income will continue. This requirement may apply to seasonal employment.”
What about VA benefits for service-connected disabilities? Does the FHA recognize this type of income?
According to the rules, “Direct compensation for service-related disabilities from the Department of Veterans Affairs (VA) is acceptable income for qualifying, provided the lender receives documentation from the VA.”
However, FHA loan applicants should know that GI Bill housing payments are not considered acceptable, which may have a lot to do with the nature of such benefits–they are only available while school is in session and eventually expire within a set number of months–therefore such payments would not be considered “likely to continue”.
No comments:
Post a Comment
Comment on this article