Sec5-P37

A borrower applies for a mortgage and discloses that part of their qualifying income will come from child support payments. The borrower provides copies of recent checks and a court order showing the required payment amount. The underwriter must determine whether this income can be relied upon for long-term repayment ability.

What specific factors must the creditor evaluate before using this income to qualify the borrower?

A borrower wants to use alimony income to help qualify for a mortgage. Documentation shows the payments will end in two years. The loan program requires stable income that will support the mortgage obligation over the long term.

How must the underwriter treat this income?

A borrower is purchasing a home with a conventional loan and plans to make a 10 percent down payment. A relative will contribute gift funds toward the down payment.

How must the down payment be structured to meet conventional loan requirements?

A borrower is using a conventional loan. A relative has lived with the borrower for the past 12 months and plans to occupy the property after closing. The relative wants to provide all of the down payment funds.

How should the underwriter evaluate this situation?

A borrower is using an FHA loan and will receive gift funds for the entire cash to close. The underwriter must determine whether the donor is acceptable.

Which donor source is permitted?

A borrower states that gift funds will be used for closing costs, but no documentation from the donor has been provided.

What must the lender obtain to properly document the gift?

An underwriter reviews two months of bank statements and identifies a single deposit that equals 60 percent of the borrower’s total monthly qualifying income.

How must this deposit be treated?

A large deposit is identified on a borrower’s bank statement that does not match the income listed on the application.

What must the borrower provide?