The Federal Housing Administration has released regulations, specifying the types of income that can be used as qualifying income for FHA loan purposes.
Trusts are a form of investment created for a variety of reasons, such as an inheritance trust, education trust, business trust, and more. Dividend payments are also common sources of income for investors. While both of these income sources may be beneficial to many individuals, FHA loan rules require that the income be verified and documented according to certain guidelines.
The FHA requires that any income from trusts or dividends be properly documented in order to be used as qualifying income for an FHA loan. This means that the borrower must provide proof of trust ownership or an executed written agreement to ensure that the income is consistent. If the borrower is receiving dividend payments, they must provide evidence of the source of those payments and a record of regular dividends received over a period of time.
In summary, FHA loan rules for income from trusts and dividend payments have been established by the Federal Housing Administration to help borrowers obtain home financing. To use this type of income as qualifying income, borrowers must provide documentation that shows trust ownership, executed written agreements or evidence of dividend payment sources. Verifying this information provides assurance to lenders that the income is reliable and regular.
This article was contributed on Jun 23, 2023
