Expert: Diann Tonnesen - 10/20/2011

Question
Hello,

I am hoping you can clear up a few questions I am having about buying/selling my home.

First let me explain my situation. I lost my job in January 2010 due to company downsizing. I have had a terrible time trying to find a full time office position. I have worked a couple of temp jobs but that is it. I have since then been in the process of making gourmet dog treats and just selling them locally. I am working on getting a website. This is something I have wanted to do for a long time but just kept putting it off.

Now here is what my husband and I are hoping to do. We have been in our home for 9 years and are looking to sell it come Spring and buy a new home. We currently have a FHA loan. I recently checked our scores, mine is 679 and his is 685. We paid off all our credit card debt as well.

So here are my questions: With me being out of work for so long and then going into my own business that is not related do doing office work that I did for years, will they still consider my income for when we apply for a loan? We would have to use both of our incomes. My husband has been at his job for 10 years.

Second: How does that work as far as with a FHA loan because I know you can only have one at a time. We will have to go through them due to not having 20% down. Will we have to sell our current home before we can buy another?

Please if you could clear this up for me. I am hoping my work history isn't going to mess things up. If you have any tips that I can be working on. We live in Buffalo, NY. Also before losing my job, I have steady employment for around 20 years. Sorry so long! Thank you very much- Diana

Answer
Hi Diana,

So many people have been "downsized" out of jobs lately, it is very sad. It happened to both my sister and cousin within the last six months, and both had been on their jobs 20+ years. (They have each since found new jobs, but for a much reduced pay.

Your credit scores are terrific, and because you have been in your current home 9 years, you could still get another home with an FHA loan without selling the existing one as long as the new home becomes your primary residence. But because you are self employed now, you would need at least a two year history of income reported on your tax returns to be eligible to claim that income for the purposes of getting a mortgage. Even if you were still in the same line of work, being self employed requires a 2 year history of income.

So unfortunately you will need to wait awhile to get that new home unless your husband can qualify with just his income. Hopefully the excitement of having your own business and making it grow will compensate for the temporary delay??? I wish you all the best of success in your new venture!