Issue: Q&A - June 25, 2018

USDA – 2106 Expenses: My borrower receives a W2 but has 2016 expenses. How do I handle income calculation for Eligibility Income and Repayment Income?

Answer: For Eligibility Income (Annual Income Calculation) the following applies: Unreimbursed Employee Expenses. The amount of unreimbursed employee expenses will be deducted from the calculation of annual income when supported on IRS Form 2106, “Employee Business Expenses.” The sum of columns A and B on Line 8 of the form represent the total amount expensed […]

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VA Loans – Income Based Repayment Plans: How does VA Calculate student loan payments for income-based repayment plans? [MC Student Loan Chart]

Answer: Attached is VA’s student loan policy as modified per Circular 27-17-2. The circular states that this policy is for all types of student loans. There is no requirement that the lender only a use a payment that is guaranteed to be at least 12 months in duration after the note date. They only require […]

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FHA – Accessory Dwelling Unit Income: Can I use both the income from an ADU (Accessory Dwelling Unit) and the other unit on a 2-unit property?

Answer: First, you need to verify that this property is considered a 2-unit with an accessory dwelling unit (ADU) and not a 3-unit property. If it’s actually determined to be a 3-unit property, then yes you can use the rental income from the other units. If it is actually a 2-unit with an ADU you’ll […]

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FHA – Employed by Family Member: Why does FHA require personal tax returns for a W2 employee of a family-owned business?

Answer: Personal tax returns will verify that the borrower is not an owner of the family-owned business. The 2016 and 2017 taxes will be required. The qualifying income will be calculated per the guideline below. Reference: 4000.1, II, A, 4, c viii. Employed by Family-Owned Business (TOTAL) (A) Definition: Family-Owned Business Income refers to Employment Income […]

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FHA – Chapter 13 Bankruptcy: Is it possible to do an FHA loan for someone who is still paying on a Chapter 13?

Answer: FHA will allow a borrower who is still repaying a Chapter 13 to obtain a mortgage after they’ve completed at least 12 months of on-time payments and have the court’s permission to obtain the new mortgage. They do also require that the loan be manually underwritten, which means that the transaction will be subject […]

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