- Until recently Home Equity Conversion Mortgages (“HECMs”) had no income requirements. But now the lender must evaluate if the borrower(s) have sufficient income or cash flow to maintain the property, pay the taxes and all related insurance and have left over enough Minimum Residual Income to maintain the household size.
- To complete this evaluation, the lender uses the Minimum Residual Income requirements of the VA Home Loan Guaranty Program, which are based on living standards in the four major areas of the country. Basically, depending on where you live and how many dependents you have, a borrower(s) needs to meet Minimum Residual Monthly Income of between $529 and $589 for a single person and $1,041 and $1,160 for a family of four people.
- How a borrower(s) meets this requirement will be based on, among other income sources, their Social Security, Investment Income and Pensions. Or if this income is not adequate, the lender can take the borrower’s investments and spread the principal amount over the estimated remaining life of the youngest borrower or non-borrowing spouse. And even if this is not adequate, the lender can use the remaining unused HECM proceeds, not required to maintain the property, and spread this over the estimated remaining life of the youngest borrower or non-borrowing. So talking with a lender about your circumstances is critical, because there are many ways to help borrowers who struggling to meet the requirements.
Would you like to learn more?
- Click here for eBrochures, eBooks, FAQs and Videos!
- If you would like to know how much you potentially qualify for, and whether you possibly have adequate monthly cash flow, go to the HECM WIZARD and input your information.
- If you would like to reach out and talk with me, fill out the information on Contact Me or email at st.john.bannon@JMCapGroup.com