Ask Kate about First Time Home Buyers Programs
by Kiersten from Washington, by FHA Home Buyer from Canada, and by...
Ask Kate about First Time Home Buyer's Programs: Three home buyers look for answers as they prepare for homeownership. 1) Kiersten wants to know about averaging income to qualify for first time home buyer financing. 2) A retired Canadian who hopes to buy a U.S. home asks for thoughts on FHA loan requirements. 3) A third buyer has questions about Fannie Mae HomePath and Freddie Mac HomeSteps programs for buying foreclosure homes.
Question 1: Getting First Time Home Buyers Loan with Averaged Income
Hi Kate, I am a first time home buyer looking to qualify for a mortgage.
My income is nontraditional. I work as a bartender, and I have worked at the same place for well over two years.
Within the last year, I have switched from just part-time to full-time employment. I understand that in a tipped or commissioned position, income is averaged over the last two years.
How does that average change if I have moved from just half time to full time during that two year period?
Thanks so much and happy holidays,
Kiersten from Washington
Ask Kate answers: Getting First Time Home Buyers Loan with Averaged Income
FHA loan guidelines differ somewhat from conventional first time home buyer loans. But in general, the person responsible for approving the loan (the underwriter) would be required to average your income over the last 2 years.
So write a letter to accompany your income documentation, explaining why the last 12 months are a better indication of your earnings and why you've gone from part-time to full-time hours. Discuss your longevity on this job and in the particular field. Include any raises, promotions, specialized training, and certifications.
I'd also list out each paycheck over the last year so the underwriter can verify, at a glance, that your income is trending upward. Communication with the underwriter through paperwork is the key since you'll rarely meet the person who signs off on your loan approval.
Important! If you are not approved, go to How to Cure Mortgage Approval Hiccups
to learn about overturning loan denials.
Best wishes for getting mortgage approval,
Question 2: FHA Loan Requirements for Retired Canadian Home Buyer
Kate, Can a Canadian, deemed a temporary visitor to the USA, get a FHA mortgage?
I am a retired Canadian who is looking to buy a house in the USA, where I'll spend up to 6 months per year. I have long-established credit and banking activity in the USA and am admissible to Social Security benefits. It seems that as a temporary visitor to the USA, I don't fit under the HUD's FHA mortgage guidelines which require that a "non permanent resident alien house buyer" works under a work permit.
There does not seem to be any possibility for a retired person. Any thoughts?
Ask Kate answers: FHA Loan Requirements for Retired Canadian Home Buyer
Here are the 3 initial eligibility guidelines for non-permanent resident aliens who wish to buy a home in the United States with FHA financing.
1. The borrower must be eligible
to work in the United States.
2. You must also have a valid Social Security number.
3. Although United States citizenship is not required, FHA loan guidelines
state the home buyer must be purchasing a principle residence. A principal residence defined by FHA is a property to be occupied by the borrower for the majority of the calendar year.
So ask the loan originator (by the way, choose a professional with extensive FHA expertise) how living in the home only 6 months of the year limits your options. Also ask if a mortgage backed by Fannie Mae or Freddie Mac would serve you better. (See Question 3 about HomePath and HomeSteps properties and special financing.)
Best wishes for buying a home in the U.S.,
Question 3: Fannie Mae HomePath and Freddie Mac HomeSteps
Kate, I have a fair credit rating. I do not have any judgements or bankruptcies. I do have a decent down payment. I would like to buy a short sale or foreclosure. Would Fannie Mae be best for me to apply for a loan with?
Ask Kate answers: Fannie Mae HomePath and Freddie Mac HomeSteps
I'm happy to hear of your home buying plans. Let's taked a look at the Fannie Mae HomePath and Freddie Mac HomeSteps programs.
HomePath homes across the nation are foreclosures owned by Fannie Mae. They are offered to both first time home buyers and repeat buyers. Even real estate investors are welcome to make offers on the foreclosed properties, after they've been listed for a couple of weeks.
Fannie Mae offers special financing options if you buy one of their designated foreclosed properties. You can read about it at Fannie Mae HomePath Financing
In addition, you will find more information comparing Fannie Mae HomePath to FHA Home Loans
Freddie Mac has an equivalent program called HomeSteps for selling their foreclosed properties. Special financing is available in some states but as with HomeSteps, buyers can seek their own financing by choosing another lender and loan program.
From time-to-time, both Fannie Mae and Freddie Mac offer buyer incentives to make buying a home more affordable. Check with your Realtor for current offers.
Best wishes in your home buying pursuits,
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