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Looking for a new mortgate, but have foreign earned income as primary income source

My husband and I have been overseas 3 years earning foreign earned income. We are in the process of selling our existing US home (already under contract) with the plan to purchase a new one. We are in TX. Currently, we have a VA loan on our existing property that is to be sold. We are attempting to pre-qualify to purchase the new home and have been told that we cannot get a VA loan (or any other for that matter) because our primary source of income comes from contract work overseas. The overseas contract renews on an annual basis. We report it as foreign earned income our our taxes (form 2555, I think) Our credit score is excellent. The only issue we are being told is preventing us from getting the loan is that my husband will primarily live overseas and won't "occupy" the home (though we travel back here regularly and this would be our primary US residence). My son and I will be "occupying" the home more frequently than my husband, however this is our US home and we will not own any other property either in the US or overseas. Additionally, we were told that the foreign earned income could not be considered for the loan leaving us to only consider limited retire pay and disability which is not enough to qualify us for the loan. My question is whether this is a lender specific standard or if it only applies to the lender through which we chose to initiate the loan process - Lender was USAA. by rusave_499_412 from Austin, Texas. Nov 14th 2012 Reply


Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

This is a touchy area, because your husband will be living and working overseas his primary residence will be there, so this would be considered a vacation or 2nd home which is not eligible for VA financing. This is different from situations where someone works for a US company and is sent on assignment to locations overseas but there "base" is still stateside. As long as the income is reported on your US tax return you should be able to purchase a new home using a conventional mortgage. I am licensed to loan in TX (our headquarters is in Dallas) and would appreciate the opportunity to earn your business. pdumouchel@primelending.com or 843.619.6025

Nov 14th 2012
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Ok.. So to answer your question.. You will deal with this issue no matter where you apply.. foreign earned income is not attachable or garnish, and it's very hard to document to the same standards if your income was here in the US (US banks require 1099's and or w2's printed in English, and the lender can use a 4506T to verify that the w2's and or 1099's are authentic, they will call your employer and do a verbal verification of employment, they will send a written VOE to the HR department in English, etc... ).. The fact that your filing the income on your taxes is good, the fact that it's foreign income is bad.. It will not be considered under any conventional, conforming financing.. Primary residence is not your Primary home that's financed.. or it's not your primary home when your here in the US.. a primary home is where you live most of the time... I had a borrower who lived in upstate NY, but worked in Manhattan.. The apartment he occupied 5 days a weeks while working in Manhattan was considered his primary residence even though he rented.. His home in upstate was his 2nd home.. And when he obtained financing on it, he had to state that it was his 2nd home.. These rules are very clear... your only option is to use a hard money lender.. You will need to put 30% to 40% down, pay ton's of fees, and pay an outrageous interest rate, but there is a loan product for you.. Or you could just cancel the sale of your current home and keep that.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Nov 14th 2012
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Travis Torcoletti (travis.torcoletti)
#0 ranked lender in South Carolina - 372 contributions

You will continue to run into this problem because foreign income is very difficult to document and establish as regular, especially if there is an annually renewable contract involved as you have said. The owner occ status comes into play because I'm guessing your husband will be the only one on the loan and he will not routinely occupy the home? Your options are not many and the ones that do exist charge much higher rates of interest because of the risk associated with the loans.

Nov 14th 2012
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Barb Lanis (BarbLanis)
#71 ranked lender in Illinois - 663 contributions

I do have a foreign income lender or two, but would need more details. Please contact me at barb.lanis@1amllc.com And yes, we can also lend in TX.

Nov 14th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

As you can see from responses, you are in a catch 22. Your problem is that lenders are all looking for good steady borrowers that they can easily identify as being good credit risks. In essence, they all have a box. Either you fit the box, and get a loan, or you don't fit the box and you don't get the loan. Because your income is seasonal contract (year to year), it is not considered income that is likely to continue. It is true that an employee could be fired tomorrow, but the vast majority aren't. The banks see your situation as being too risky so they just don't do it. The suggestions of Private or hard money loans is viable, but expensive. Your other option is to wait until you are back in the states full time with domestic income. Good luck. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Nov 14th 2012
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

You will likely run into this problem anywhere you go. Have you considered purchasing it with 25% down payment and purchasing usisng a conventional, non-owner occupied program?

Nov 14th 2012
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I went to VA Guidelines website at: http://www.va-guidelines.com/va_occupancy_requirement.htmAccording to this website, a spouse can satisfy the occupancy requirements. Excerpt as follows:Occupancy by SpouseOccupancy (or intention to occupy) by the spouse satisfies the occupancy requirement for a veteran who is on active duty and cannot personally occupy the dwelling within a reasonable time. Occupancy by the spouse may also satisfy the requirement if the veteran cannot personally occupy the dwelling within a reasonable time due to distant employment other than military service. In these specific cases, consult you Regional Loan Center to determine if this type of occupancy meets VA requirements. The cost of maintaining separate living arrangements should be considered in underwriting the loan. For an IRRRL, a certification that the spouse previously occupied the dwelling as a home will satisfy the requirement. No family member or person other than the veterans spouse can satisfy the occupancy requirement for the veteran. Any thoughts or considerations???

Nov 14th 2012
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June Green (JuneGreen)
#29 ranked lender in Texas - 2 contributions

I would advise you contact Chad Bowman at United Lending or CT Hancock at Coldwell Banker Mortgage. Chad is a retired Vet and Loan officer and is very knowledgeable on VA loans. CT is very experienced also and has good rates. Prime Lending is also a very reputable loan company. Another few contacts are Tony Cussumanio at Service First Mortgage or Tony Ruff at First American mortgage all in Austin! Good luck and thank you for the sacrifices you made and your husband's service. June, Coldwell Banker United

Nov 14th 2012
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Under VA loans, they only lend for PRIMARY residence.. if the spouse is in the home and the husband is enlisted and overseas, then that's acceptable... however the home has to be your PRIMARY residence.. Not your 2nd home.. if one of you is here in the US for more than 6 months and 1 day, then you can call this your PRIMARY... this will satisfy the occupancy guideline, but in your scenario, you and your husband are contract workers, not enlisted active military personnel... so the overseas argument will not work.. But even still, if you live in the home for 6 months and 1 day, you can call it your primary, but you still have the income dilemma with the foreign income... and that's something I don't see you getting around.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Nov 14th 2012
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

We could try the VA option but it is very definitely a long shot. We handle a lot of VA loans and something like this would likely only be approved IF VA also gave approval.

Nov 14th 2012
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