I just spoke with Laura @ Denver HOC & she confirmed the income cannot be used because it isn’t considered to be legally derived since it’s legal on a federal level. She did point me to the section in the handbook that addresses this. I am going to update the question on the Helpdesk to include this information as well

4000.1: FHA Single Family Housing Policy Handbook

II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT

A. TITLE II INSURED HOUSING PROGRAMS FORWARD MORTGAGES (09/14/15)

4. Underwriting the Borrower Using the TOTAL Mortgage Scorecard (TOTAL) (09/14/15)

c. Income Requirements (TOTAL) (09/14/15)

i. General Income Requirements (TOTAL)

The Mortgagee must document the Borrower’s income and employment history, verify the accuracy of the amounts of income being reported, and determine if the income can be considered as Effective Income in accordance with the requirements listed below.

The Mortgagee may only consider income if it is legally derived and, when required, properly reported as income on the Borrower’s tax returns.

Negative income must be subtracted from the Borrower’s gross monthly income, and not treated as a recurring monthly liability unless otherwise noted.

We have not received additional guidance that FHA is now allowing income derived/received from cannabis industry

Original question:

I have a scenario where the husband is the owner of a Cannabis business, his wife is a W2'd employee of the husband (in the cannabis industry) with no ownership interest in the business.

Can we use her W2 income to qualify or is her relationship to the owner have an adverse effect?