FHA loan processors - Question about proof of income requirements?

My loan processor has told me to make sure I document all large deposits (like pay checks, gifts from family, etc.) because "they'll want to know where the money came from".

I guess my question is: What is the definition of "large"?

I have a small side business doing private consulting. At most, I make maybe $200/week. This is all cash. If I deposit this, will I need to prove where it came from? And how would I do that since it's cash?

4 Answers

  • 1 decade ago
    Favorite Answer

    Yes, that is considered a large deposit.

    I used to be an FHA underwriter...and the reason that the income has to be documented as to the source is to make sure that you are not borrowing money and not disclosing that it's a loan.

    Here is the bottom line: ANY company that is supposed to be paying you for WORK done is supposed to legally pay you ON the books....that is what the IRS will tell you if you call and ask them.

    My advice? DO NOT deposit any of the money for awhile that you get from your "side job" until you close on the home to keep the deposits off your bank statement.

    However, if you need that money to qualify for the house, then you have another major problem...b/c FHA won't accept non-documented income to qualify for a loan, and that is the same for waitresses that claim they make $50K a year but can only prove $18K a year...if $18K is what they can PROVE, then that is what FHA uses.

    Source(s): Many, many years as a real estate broker and former mortgage broker/underwriter and always followed by my 7 "thumbs down" stalkers on Y!A.
  • 1 decade ago

    yes if u deposit it and it shows up every week as $200 in ur account. thats $800 a month. do u have receipts? do u need this out side income to qualify for the loan?

    do u claim this money on your taxes? if not keep it out of the bank...you didnt hear it from me....

  • 1 decade ago

    If you indeed add that to your income thru the business. You also must claim the income on your income taxes as well.

    Remember you are doing a small business with the consulting business. Hope you have all your ducks in a row on that one.

    If you are depositing the cash from your small consulting business then you must also show your business lic. etc.

    Best of luck

  • 5 years ago

    You usually need 2 years continuous employment with ONE employer and W-2 forms to prove your income. It doesn't hurt to ask.

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