FHA loans and income requirements

Hi,

I am interested in buying my first home. I would be able put down at least the 3.5% down payment required by the FHA, possibly up to 20%. For about the past five years, I have been taking money out of an annuity, which has been taxable income. However, this last year, because of the economy and because the investment values went up instead of down, the amount was not taxable. I read on the Internet that the FHA does not have a specific income requirement. I am self-employed, and business has been slow. Taking into consideration the investment income combined with my wage income, I believe the combined income amounts should be enough. My main concern is that the majority of the income is investment income. Just looking at my regular (work) income alone, over the past few years or so, I don't know if these income amounts would be considered enough to qualify for an FHA loan. So, can you tell me how carefully they would look at this, and if they would check to see exactly how the income is constituted (i.e. investment income, wages, etc.), or if this would make a difference at all. Also, can you give an idea as to how many years they would look back as far as looking at income? I am currently renting my home. There is approximately 40k owing on my student loan. There is probably a little over $4,000 owing on credit cards. I recently ordered a copy of my credit report, and my credit score is in the Excellent range.

Would it be in my best interest to buy before April 15th, as the income for 2009 will be considerably lower than previous years, because the last installment I took out from the annuity was in 2008? All of the money has now been taken out of the annuity. I know that it is possible to file for an extension for tax returns, but is it possible that the bank or FHA would request documents sent to the IRS giving estimates of income for 2009? Maybe I am overreeacting, but, because of all the information I have told you, I feel a sense of urgency to buy before April 15th. Am I just putting unnecessary stress on myself?

Do you think the FHA program would be my best option as far as saving the most money, since it would presumably give me the best interest rate? Also, at what point in the home-buying process should one look into getting pre-approved? Would this still be done through the bank, or through FHA? A friend of mine bought her home with an FHA loan, and said she took a class that taught her about the whole process. Is this required? At what point in the home-buying process should one start looking into this sort of class?

Thanks in advance.

paulj22

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