If you are self-employed or sub-contracted, you have a unique situation versus those who are traditionally employed. You likely use a 1099 to file taxes, and sometimes, do not receive pay stubs. Despite these differences, self-employed and sub-contracted Americans can still qualify for an FHA or USDA home loan.
The rule of thumb is that your income has to have been stable for the past two years with no earning declines of 20 percent or greater for long periods of time. If your job has changed more than three times in the past year, you should be prepared to be asked for documentation in order to hopefully get you approved.
Your overtime, bonus, and commission income may be able to be counted as well. This money will need to have been consistent over a period of a year or more, and documentation will be required.
If you work part time, you also can get a federal home loan, but only if you have worked in the same industry for two years and have had stable income that will be averaged out by the lender. What if you receive support from the state, retirement, a former spouse, or a parent?
If you have been receiving child support or alimony over the past 6 months or more, you can use it towards income if proper documentation supports what you take in. Any child support or alimony you pay will be considered when your Debt to Income ratio is calculated, but it will not necessarily stop you from getting a home loan.
If you receive disability, this can also be counted as income. You will need to supply the most recent award letter from whoever pays the disability, especially if it is the VA.
Money from a pension, 401k, TSP, or IRA will be counted as assets. If you are already retired and are using this money to support yourself, that money will be regarded by the lender as appropriate.
If you are being gifted funds from a donor towards your down payment or closing costs, the lender will ask you to provide corresponding documentation. A bank statement from the donor showing they took those funds out in order to give them to you will likely suffice.
FedHome Loan Centers is ready to handle your unique lending situation, get you pre-approved, and answer your home loan questions. Please contact us at 877-432-5626(LOAN).