Help: 1st time homebuyer FHA loan Quailifications? Taxes?

firerock1 · Joined: 07 Nov 2009 Posts: 1 Location: California

Hello,

I'm new hear and I'm interested in purchasing a home for the 1st time. I'm looking into an FHA loan and I'm not sure if I would qualify.

My fico scores are in the high 600's low 700's (685, 697, 722)
I am self employed (make about 80k after deductions)

Here's the situation. I owe taxes for prior years (I currently do not have any tax leins, no judgements, nothing on my credit report showing anything owed, no payment plans on taxes) My account is not currently in collecitons because last year I submitted a financial questionairre to the IRS and they put my account as "non-collectable" for the time being and I no longer get anything in the mail from the IRS. I believe that next summer they will ask to provide an updated financial questionnaire.

I want to purchase a home, and then after I purchase I'm my tax advisor recommends doing a 1 time offer in compromise with the IRS

My objective is to get into a house before I do the offer in compromise. As long as I have filed my 2008 and 2009 taxes would I be able to qualify for a FHA loan in Feburary (even If I havent yet paid my taxes for 2008 or 2009?)

I would like be in a new house (tired of renting) and I will clean up my taxes immediatley after I move in to my new home. I want to avoid doing the offer in compromise 1st because it may show a negative on my credit report for 6-12 months once I start the process.

Does FHA only verify income tax filing only, or do they also check to verify proof payment of taxes? As long as their are no tax leins, judgements, no payment plans, nothing negative regarding taxes on credit am I still able to get a FHA loan?

Please provide any help and/or recommendations, I have $25k saved right now, and my family is going to gift me additional $ for the down payment. Thank you

Kathleen · Joined: 01 Dec 2009 Posts: 7 Location: Pleasanton, CA

The taxes might be an issue. Even though the IRS has not filed any official liens on you for credit report there is another system that FHA uses. We have to pull a Caiver# on you using your SSI number and if the IRS has placed anything there about your IRS debt than it's a no go.

Here is the link to the HUD website that talks about Caiver#s and what it's designed to do: http://www.nls.gov/offices/hsg/sfh/sys/caivrs/caivrs.cfm

I hope this helps. You can try and apply for a loan to get pre-approved on a TBD property. The Caivers will be requested and see what comes up.

Another option is to look into a conventional loan which here in CA you need a min of 10% down for a single family home. The Caivers number is not needed. However transcripts from the IRS will be requested. Not sure if there would be any note on there about the outstanding debt. YOu can actually order your own IRS transcripts to see what will show up. http://www.irs.gov/individuals/article/0,,id=110571,00.html

Now for the income piece of this as you are self employed. From 2007 to 2008 has your income been declining or remained about the same. When you say you have net income of $80 is that a year over average over the last 24 months? The number that will be used is the net number off the schedule C. There are some items that banks will allow back into income such as Depreciation and one time documented business expenses.

Hope this helps.