How To Get Enough Qualified Income To Purchase a Home

Written by Posted On Monday, 29 March 2021 00:00

“It’s simple arithmetic: Your income can grow only to the extent that you do.” T Harv Eker

The pandemic year of 2020 caused some business people to prosper, and others have had to struggle to survive.  As a mortgage officer, I have heard customer stories as they describe their trek to keep home and business lights burning.  Mortgage rates are low and expected to stay relatively low through the year. However, the price of those rates has been rising over the last couple of months by about a half-point since January 2021. 

Business owners and workers who have experienced a gap in income during the lockdown period last year have been trying to recover as the marketplace opens again. For these beleaguered borrowers, we, as lenders, need to spend some time finding ways to get them enough income to qualify for the home loan they need to move forward with the life they want.   

Here are some solutions we have found for borrowers who were off work for a few months but returned to work.  

W2

If you are an employee on a salary or paid by the hour, you still may be able to qualify if you are back to working in the same line of business where you have the experience, and you have guaranteed income from your employer. 

Search for other income sources such as investment income or pension income.  Consider adding a co-borrower or cosigner to the loan if the borrower has additional resources to make the mortgage payments easily. Explore ways to restructure other debts or pay off some debt to reduce the amount of income needed to qualify for the mortgage. 

Self-employed

If your business suffered last year, but you still show enough net income after expenses on your 2020 tax return, you may still be able to qualify to buy a home or refinance your existing loan to better terms. Your lender can go over your tax return to find expenses that are sheltering you from taxes but can still be added back to your income for loan qualifying purposes.  

Some of the expenses that can typically be added back to qualifying income are depreciation or depletion write-offs, depreciable business miles, deductions for business use of your home, and once-in-a-lifetime expenses.  

Other solutions for getting self-employed borrowers approved for a mortgage are to document debts paid by the business for the last 12 consecutive months that are already deducted from business income.  Suppose the car payments and other debt appear on the borrower’s credit report but are paid by the business, and the  payments on those debts have already been deducted from business income. In that case, the chances are good those debt payments can be omitted from the total income-to-debt ratio.

As real estate and mortgage professionals, taking the extra time to explore the best solutions for our customers gives us trusted advisor status with the people we serve.  The solutions we help them find gives our customer hero status with their loved ones.  

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Jo Garner

“Whatever YOUR personal priorities are, my job is to help you get the mortgage terms that will give you bragging rights when you talk about it and help you score on hitting your goals.”

As a mortgage loan officer, my job is to help you get to the benefits you want from your financing terms. What is most important to you? I can help you find the financing terms that will help you get to what you want.  What is your comfort level on a house payment? How much are you comfortable paying down,? What type of financing do you need to get the house you want to buy or refinance?

Different clients have different priorities in life—some are buying their first home with very little down payment funds. Some are recovering from medical challenges, divorces or preparing to send children to college and some are embarking on a long term goal of buying properties to build rental income.”

Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.

Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.  

Jo Garner has been in the real estate/financing business for over 25 years.  She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge

On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate.  In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 25 years.  Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.  

In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.com Jo Garner also host the radio show Real Estate Mortgage Shoppe airing on News Radio AM 600 WREC and iHeart Radio with podcasts and show notes published on www.JoGarner.com  

www.JoGarner.com

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