Archive for April, 2011

Basic Facts First: On a VA home loan, the Veteran’s spouse’s debt obligations have to be counted against him/her when qualifying even if the Spouse will not be a borrower on the VA loan (i.e. “non purchasing spouse”).
Underwriters therefore add up all the monthly debts belonging exclusively to the spouse and count them against the Veteran (Borrower).
And since the spouse is not signing on the loan, his/her income, if working, is typically not used.
However a very little known fact is that VA actually allows *THAT PORTION OF THE SPOUSE’S INCOME THAT IS EQUAL TO THE MONTHLY DEBT OF THE SPOUSE**** to be used to offset the debt.
Here’s an example

Veteran has $5000/mo income and $1000/mo debt of his/her own
Spouse has $2000/mo income and $700/mo debt of his/her own

We can use $700 ** of the spouse’s $2000mo but no more*** to offset the debts.

This gives us total debt of $1700/mo but total useable income of $5700/mo.

Thanks Vets for serving our country! :)

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When someone has entered the U.S and chosen to reside here, they are considered a “Resident Alien”.
However there are two labels for folks that have come to stay.

(i) “Permanent Resident Alien” – A non-resident alien is a lawful permanent resident of the U.S. at any time if they have been given the privilege, according to the immigration laws, of residing permanently as an immigrant. This status usually exists if the Bureau of Citizenship and Immigration Services has issued a green card. In actuality, there are no differences in terms of Lending guidelines , between Permanent Resident Aliens and U.S.-born Citizens.

(ii) “Non-Permanent Resident Alien” – typically these are people that arrived on a J-1 or F-1 Visa. They may be students, or be working under I.N.S authorization. If they are working with an Employer Sponsored Visa, they have no limit on their US residency.
However if they’re working with a Non-Employer-Sponsored Visa they have to show at least 1 yr history of U.S. residency.

So here are the rules when applying for FHA financing:

The non-permanent resident alien
(i) must be applying for a loan to purchase a principal residence
(ii) must show an Employment Authorization Document (EAD) from BCIS (US Bureau of Citizenship & Immigration Services)
(iii) must possess a valid Social Security Number (SSN)/card- plz note a Taxpayer ID# (TIN) will NOT be allowed.
(iv) must show an Authorization For Temporary residency – if this is about to expire within 12 months and there has been no prior history of renewals, then the FHA Underwriter must determine the likelihood of renewal based on information from the BCIS
(v) must show 2yrs Federal Income tax returns for proof of income

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How Does FHA Look at Garage Conversions & Other Unpermitted Additions?

If a home has something about it that is different to it’s original structure, you may have a problem getting an FHA loan on it. What’s an FHA Underwriter going to do?

Typically the Underwriter is going to
(i) Ask for confirmation from the Appraiser that the work was done in a workmanlike manner i.e it doesn’t pose a hazard of some sort
(ii) Make sure the Appraiser has not used that living space in this final value determination.
Make sure the Appraiser mentions whether the current use is in compliance with the zoning ordinances. Appraiser has to mark the box indicating whether it is a Legal, Legal Non-Conforming (Grandfathered Use), No Zoning, or an Illegal Use.
“If the existing property does not comply with all of the current zoning regulations (use, lot size, improvement size, off street parking, etc.) but is accepted by the local zoning authority, enter “Legal Non-Conforming” and provide a brief explanation. If the use is not legal, the property is not eligible for FHA mortgage insurance.” Here is a link to HUD/FHA rule…02appdHSGH.pdf
(iii) check If work has to be done to restore the property to a safe/original condition, what’s the “cost to cure” the defect? An Appraiser has to estimate this and sometimes there might be a need for a full blown Contractor bid in writing.

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