In North Carolina we have some different laws than other States when it comes to Financing a home. The NC Laws require that we validate that you have the income (at the time of closing) to be able to make the payments on your mortgage. It makes us ask, “How Old Guys Qualify for FHA Loans in NC?” Retirees can buy a house, and they have MANY options available!
Qualifying For A Home With Retirement Income
The good news is that we can “Gross Up” Social Security Income by 115%. So if you collect $900 in Social Security income, we can count $1035 for qualifying. Retirement or Disability Income that is not “taxed” can also be grossed up. We will need the “Awards” Letter to confirm that you will continue to receive the income at that rate.
If you have a large savings account, and you are having an accountant, or Financial Planner manage the money – and you have it set up to give you regular installments – we can count that income too! We just have to document a history of you receiving it… and there has to be enough money in the account to pay you for the next 5 years. So if you have $150,000 that you are pulling $600 a month from – that would last you for WAY longer than 60 months! As long as we can show that it’s automatically coming to you – we can count it.
Veterans who have decided it’s time to retire from the Military have some special “hoops” they must jump through – depending on where you are in that process. If you have already accepted a position in Civil “life” and you are able to move in the residence, or have a spouse who can move in the residence, within 60 days – then it’s all good. If you are retiring and you are receiving retirement income – we will need 2 full months of payments from the VA retirement system to qualify you.
Because qualifying for a home with Retirement Income could mean that you can’t qualify for a house that you are comfortable in, there are other options available.
Those who are interested in FHA Loans in NC sometimes co-sign with a child. Co-signing is one of the most popular ways we see benefit for grandchildren and children these days. It allows children to co-sign with parents who might be on a limited retirement income, so that they can qualify for a little nicer home. The non-occupying co-borrower FHA Loan is a great way for adult children to help retiring parents. FHA Loans only require a 3.5% down payment, and the down payment can be a gift, or the sale of an asset.
If the parent is going to be on the loan for the house, and live with the other family members, you might be considering a USDA Home Loan. In-Law Suites are very popular now for multi-generational housing. USDA does not require a down payment – however, they do require that you buy a house that is within the “USDA Loan Eligibility Map” approved areas. They also require that the “Household” Income be below that for the County you are buying a home in.
What if the parent is going to live in the home, receives some monthly income, but doesn’t want to go on the mortgage loan. Is THAT income used to calculate the maximum USDA Loan income for your household? Unfortunately, it could be. So could your mom’s social security payment if she lives with you full-time. Understand that USDA is looking for 2 different parts of income.
First, they want to know if the income that is received in the home exceeds the maximum income for that area. Second – USDA wants to see if the income received in the home can be considered “reliable” and therefore used to qualify the borrower for the mortgage loan.
If you are considering buying a home in NC, and have questions about qualifying for a home with Retirement Income – please call Steve and Eleanor Thorne, Mortgage Bankers in Cary , 919-649-5058. We offer the best rates and have decades of experience! We lend money all over North Carolina! Connect with us on Google Plus or via Facebook