Below we have listed some tips to help teachers coast through the mortgage pre-approval process. Regardless if you are looking for a 100% USDA loan, FHA or Conventional mortgage, the tips below should help. USDA Rural Housing loans remain a popular program for Georgia teachers because the program does not require a down payment. The best part is most of GA outside of Atlanta is still classified “rural” and eligible for the program.
One of the first things a lender or bank will want to see is evidence of full-time employment. This is usually done by providing recent tax returns and paycheck stubs. However, some teachers only work part-time or are considered “full-time substitutes” who may or may not work a consistent 40 hour work week.
When the mortgage company reviews part-time income for qualifying purposes, a two-year history of part-time work needs to be documented. If the teacher has been working for a minimum of two years and can document that work history by providing W2 statements from the statements along with a letter from the school then the lender can use the teacher’s income in order to help qualify.
If you are a Georgia full-time teacher but don’t have a two-year history of teaching then you will need to find your transcript from your college showing your graduation date. If you’ve just graduated, are working full time and can provide recent paystubs to prove it then the lender can use your income for loan qualifying.
It’s also important to properly calculate your monthly income. Lenders use a debt-to-income ratio which is a number calculated by dividing total monthly debt by the gross monthly income. For example, your total housing payment plus your car payment is $1300 per month and your gross income is $3500 per month. $1300 divided by $3500 is 37%, which is within debt ratio limits.
One mistake buyers can make when figuring monthly income is not using the gross income amount for qualifying. Remember to always use the amount before any deductions are taken out. Other times a teacher can get paid every other week instead of twice per month. If a teacher makes $1,700 every 2 weeks, that works to $44,200 per year or $3,683 per month. Correctly documenting income for teachers is easily accomplished when the proper procedures are followed.
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