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Cash Doctor
851 Posts |
 Posted - 07/10/2008 : 08:44:17 AM
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My customer has his fulltime job which is W-2.
He is also a freelance reporter for the newspaper. He has worked for them for 7 years. I am trying to calculate the income to be used.
I have his 2006 and 2007 tax returns as well as his last 12 month bank statements. Appears the income is growing which is good.
On his schedule C I notice he writes off his auto payment and other auto expenses. Would love to take his auto payment out of DTI if I could??
He mainly reports on the pro football team so he earns more during the season than other months. But he does get paid every month (Lowest 500 highest 2700). I have his deposits from his freelance job added up by month for the last 12 months.
Should I take an average of that?
I have my FHA underwriting books in front of me and will continue researching but wanted to check in with some of the FHA pros. Appreciate it thanks. |
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Glider
22 Posts |
Posted - 07/10/2008 : 1:43:13 PM
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First, you CAN count the second job if he has had it for more than 2 years, even if it is seasonal. If he has had it for 2 or more years, you count his total income from the seasonal job and average it over 12 months. That's what you can use on the second job.
As to car expense, I assume it is an unreimbursed business expense, so you cannot disount his car payment. However, look closely at how he is writing the car off. Is he taking the mileage deduction or itemizing deductions for the car? If straight mileage, you can add back in that portion of the mileage that is in fact depreciation. In 2005-2006, that was $0.17 per mile. For 2007, it was $0.19 per mile. I haven't found the rate for 2008 yet. |
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jvanpetten
2536 Posts |
Posted - 07/10/2008 : 2:30:03 PM
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| Did you try running it without the second job income? Or run it with the average of the last two tax returns (net on schedule C) and see if it is approved. |
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aspiring1
1313 Posts |
Posted - 07/10/2008 : 3:14:39 PM
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| You probably already know this...but worse case scenario; if the second job can't be used for qualifying/DTIs, it CAN be used as a compensating factor. |
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jtm7332
499 Posts |
Posted - 07/30/2008 : 09:35:30 AM
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| If he does 1099 you can use 5% of that and state it. De minimus self employed income. I know it is only 5% of it, but it could help! |
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Cash Doctor
851 Posts |
Posted - 07/30/2008 : 1:41:51 PM
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jtm. You can only do that if under 5% of his total income is from self employed.
This is a good tip to use for a borrower that is W-2 and is just short of ratios. Of course you would only include the extra income if he has a side business. Good call I remember this gem from soem FHA training. |
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Cash Doctor
851 Posts |
Posted - 07/30/2008 : 1:43:01 PM
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| Oh and SE income is calclulated by taking net income from past 2 returns and averaging over 24 months. Took a big hit as I averaged last 12 months. Bummer |
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