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I’m trying to find out how much mortgage I can get, but I need to know exactly how lenders look at income; this is my situation:
Annual Gross Income on W-2: $29,000
Available cash for down payment: $7,000 (I’m planning to apply for a FHA loan, so I can reach the 3.5% requirement on a mortgage up to $200,000)
Debt to Income Ratio: 0% (no other loans and all my credit card have $0 balance)
FICO Score: 777
Now the tricky part: I’m getting a tax refund of $12,000 a year. This is a steady amount (last 3 years), it is verifiable through my 1040, and I’m not expecting any event in the near future that could alter this annual amount, so I guess it is pretty safe to assume that it will continue in the future.
In real life this annual refund is a very important part of my income. My question is: will the lenders count this tax refund as income, or they only take the W-2?
That's a good question and while I don't know if underwriters consider it a part of your income, I can tell you the IRS does seem to consider it income since they tax it the following year.
I can't figure out how you get a $12,000 refund on a yearly income of $29,000????
In calculating net income, it sort of is. I'm pretty sure lenders take this into account, but you can really do yourself a favor by increasing the number of exemptions for tax withholding so you won't have this issue to begin with.
Why in the world would you want a $200,000 mortgage with your income? That's ridiculous!!
We bring in six figures and wouldn't want to purchase a house that expensive.
Because he makes a lot more money than he officially shows. A lot of people, like tattoo artists and nail salon workers, can cheat the system because they get paid cash.
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