Below we have listed some tips to help North Carolina teachers breeze through the mortgage pre-approval process. Regardless if you are looking for NO money down payment USDA loan, FHA or conventional mortgage, the tips below will apply.
One of the first things a lender 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 a lender 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’re a 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 pay stubs to prove it then the lender can, in fact, use your income for qualifying.
Finally, it is 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 might be $1,200 per month and your gross income is $3,500 per month. $1,200 divided by $3,500 is around 34%, well within debt ratio requirements.
Common mistakes teachers can make when figuring monthly income is making sure the gross amount is used for qualifying or 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 $1,750 every other week, that works to $3,791 per month (income X 26 / 12)
Credit Requirements: Credit score requirements for the most common teacher loan programs is very similar. In most cases, a min 580-620 credit score will be needed to obtain loan approval.
Please learn more about each loan program in the links above. Call us today with any questions, we have specialist standing by 7 days a week.