Are you thinking about buying a home even though your income fluctuates? Uneven income sources, such as a business or commission pay, can be a real challenge for those who want to advance to the next level of the American dream.
But, you can still get that home you want through a few different funding ideas. Here are some ways that might work for you.
1. FHA Mortgage Loans
Loans through the FHA (Federal Housing Authority) are designed to encourage home ownership among those who might get locked out of the traditional, fixed-rate market. An FHA loan requires a much smaller down payment (as little as 3.5% depending on your credit rating) and lower credit score expectations.
You can take advantage of FHA loans as a payment stabilizer because you can keep that extra money you saved for your down payment and use it to ensure payments are made when your income fluctuates.
2. Hard Money Loans
A so-called hard money loan is more of a bridging loan tool. It is a short-term loan made by private mortgage investors who hold their own loans in their portfolios. Because they don't have to adhere to the rules set out by the FHA, Fannie Mae, or Freddie Mac for traded loans, hard money lenders can loan to buyers who may not meet the strict income requirements of these organizations.
If you've been denied loans due to your unusual income, this could be a great way to get a home now and buy time to find a traditional lender who will work with you or for your income to settle down. It's more expensive than other options, but it can work for many buyers.
3. Variable Interest Rate Loans
Variable rate loans, as the name says, allow for the interest rate to vary. You generally start out with a much lower interest rate and payment, then it adjusts later on. A balloon payment is usually required in the future during the loan term.
If you get a variable rate loan with a lower starting amount, you can have a lower "floor" of obligatory payments for months when your income is lower. When income is higher, squirrel the extra cash into an account specifically to use if the rate resets higher or the balloon payment comes due.
Would a bridge loan, a lower-capital FHA loan, or a flexible variable-rate loan be right for your specific income challenges? Talk with an experienced loan financing service today.
When I started my own company, I knew that I needed a little business capital and fast. In an effort to raise money, I worked with various lenders to discuss loans, financing, and special terms. Unfortunately, I quickly discovered that not every loan was created equally. Some loans had almost predatory terms like high interest rates and penalties, while others were completely fair. Fortunately, a business consultant of mine taught me about loans and financing, so that I could make better choices in the future. The information on this blog saved my business, and I know that it can help yours too.