Category: overtime income fha loan

Kentucky FHA Temporary Guideline Changes:
Rental Income & Self-Employment Income

FHA Announces COVID-19 Temporary Guidance for Kentucky FHA Mortgage Loans
Due to the ongoing effect of COVID-19, FHA has announced in ML 2020-03, updates to the following temporary guidelines below effective with case number assignments on or after 8/12/2020 -11/30/2020:

Rental Income for Kentucky FHA Mortgage Loans

• When qualifying utilizing rental income, for each property generating rental income the following is required:
  • Reduce the effective income associated with the calculation of rental income by 25%, or
  • Verify 6 months PITI reserves, or
  • Verify the borrower has received the previous 2 months rental payments as evidenced by borrower’s bank statements showing the deposit. (This option is applicable only for borrowers with a history of rental income from the property).

Self Employment Income for Kentucky FHA Mortgage loans 

• Self-employment income must be stable with a reasonable expectation that it will continue. Verification of the existence of the borrower’s business within 10 calendar days prior to the date of the Note to confirm that the Borrower’s business is open and operating.  One (1) of the following to verify and confirm that the business is open and operating:
  • Evidence of current work (executed contracts or signed invoices that indicate the business is operating on the day the lender verifies self-employment);
  • Evidence of current business receipts within 10 days (Note Fairway Policy) of the note date (payment for services performed);
  • Lender certification that the business is open and operating (lender confirmed through a phone call or other means) (Note Fairway Policy); or
  • Business website demonstrating activity supporting current business operations (timely appointments for estimates or service can be scheduled).