As a mortgage guy, from time to time I get asked questions like: “ do I qualify for a Roth IRA?” or “what is the difference between a Roth IRA and a traditional IRA?” Of course, my answer is the same – “I’m not qualified to answer this question, as I’m only a mortgage guy.” Typically, I end up referring someone who asks me this question to someone I know who is qualified to handle these questions.
What I will offer though, is that qualifying for a Roth IRA is a lot easier than qualifying for a mortgage. If you think about it, it makes sense. For a Roth IRA, you are giving your money to yourself for a future purpose – so there are no credit requirements. For the Roth IRA you only have to really meet two qualifications: have some source of documentable income and don’t make too much money.
More specifically for the Roth IRA, you are capped in the amount of income you can make annually and you are capped in the amount you can contribute to your IRA annually. These amounts are subject to change on an annual basis, but they do not always change. For more specifics on the program, I encourage you to speak to a qualified financial and/or tax professional.
Now Qualifying for the Mortgage
The mortgage company is giving you money so the responsibility is on you to prove to the lender that you are credit worthy. Your mortgage company will carefully analyze all aspects of your financial situation including: documented income (for most loan programs), money in the bank, and good credit.
Unlike qualifying for the Roth IRA, qualifying for a mortgage goes much better with more income. Mortgage lenders like to see more income coming in on a monthly basis than going out in debt payments.
Unlike Roth IRA questions, if you have mortgage program specifics, ask me a question.