Per Diem and buying a house?

Talk to a loan officer. Some will work with you and they sometimes understand that per diem is part of your income and use that as a one of the factors to determine a better loan amount.

what kind of percentage of income is your per diem? What are you looking at here? Worst case you set your sights on a smaller loan, or you save enough to make up the difference.

I'm heading into my 6th year of trucking and I've managed to save $30k without really trying at $100/week and that's excluding the 10% I have my company put in a 401k.

I'm stuck between buying a house I will hardly see or rental income, or taking off 3 or 4 months and seeing a bit of the rest of the planet.

 

Most banks should figure your income off of your gross income before deductions so I don't see how your per diem deductions should affect your ability to qualify for a loan.

But I could be wrong

If your talking about the company taking the per diem pay out to lower your taxable income then I wouldn't do that anyway. You can take the deductions at tax time and come out the same while still have a larger gross income for times like these.

 

Your adjusted gross income is from line 32 at the bottom of page one of the 1040. The mortgage broker should not even be considering what is on page two.
Your per diem is on form 2106 and is part of the deductions allowed on Sched A. They should not even be considering this.
Are you receiving your full mileage pay? Sounds like you are still getting a portion in per diem, which would lower your adjusted gross income by 15-25%.

 

Au contraire, mon frère.

First your right, income is on line 32 and the underwriter will consider all of your income. BUT, income is only half of the equation. The other half is debt. It is the debt to income ratio that is the real deciding factor. Not how much you make, but how much you have left for a house payment.

And my good friend Schedule A is all debt. An underwriter has very little sway here. With the exception of the charitable deduction, it is all considered hard debt once it is on Schedule A and must be deducted from the income.

This is just one of the places where the whole should you or should you not take per diem debate falls apart. There are many things you have to take into consideration. You just can't go on the it's a scam and the company is screwing me theory. You may just wind up screwing yourself.

In the case of the OP, trying to buy a house, it may be better if he was taking the company paid per diem. Yes, it does reduce his income on line 32. But, it does not increase his debt on Schedule A. An underwriter has a lot more flexibility in allowing alternate sources of income, than they do in disallowing documented debt.

Will an underwriter allow per diem pay? Maybe. Maybe not. As a matter of standard the answer is no, because in the rest of the world per diem is a one off payment and not regular. But in trucking it can be considered regular. If it can be documented on pay stubs over a period of time and backed up with a letter from the employer stating it's a regular part of your income, there is chance an underwriter will consider it.

< used to be a loan officer, daughter is an underwriter.

And to the OP. You will not pay more in taxes if you take company paid per diem. In all likely hood you will pay more in taxes by deducting per diem for yourself. For income tax it will be at least neutral. But in reality you are substituting the per diem deduction for the standard deduction. You are better off taking the per diem as tax free income and taking the standard deduction on a reduced income. And for SSN you will actually save the 6.5% on the difference between the 100% income with no per diem and the income less the per diem.

 

Companies paying part of your income as Per Diem is a money making scheme for them, they are not doing it to look out for the driver.

By paying your part of your income as Per Diem, they are actually kind of (noun not allowed on this board) to the driver. They are not paying the correct amount in to your social security fund vacation pay, or disability insurance. Anything that is figured as a percentage of your pay you are being taken advantage of.

Plus the added fact of it is not income, drivers do not seem to get this but Per Diem is not income. For instance if your employer is paying you Per Diem this legally destroys the amount you are suppose to claim at the end of the year. I do not want them to pay me Per Diem on my pay check, I deduct it at a rate of 58.00 for every 24 hour day I am not at home. And also I show the correct amount of income for credit purposes.

Drivers just do not get this at all, just like most do not understand logging regulations.

 

Oh, this is rich. Please enlighten us all and tell us, specifically, what items on Schedule A are debts.

Anxiously awaiting your response. . .

 

I too would like to hear this explanation of Sched A being debt.