Monthly income will be the most important determinant along with your credit scores that will determine how much of a home you can afford.
Other income such as part-time income, bonus income, overtime income can be used as qualified income as long as the borrowers had a two-year history and the income is likely to continue.
In order to be able to use a second full-time job, bonus income, overtime income, part-time income, or other income, the borrower needs two years of seasoning. The other income cannot be declining. The mortgage underwriter needs to make a call and has the discretion on whether or not the income is likely to continue for the next three years. Lenders need to make sure the borrowers will remain employed and pay their new home mortgage payment without any stress or financial difficulty.
In the event, if you are an employee who is on salary, this is the way you calculate your monthly income for mortgage calculation.
If the salaried employee is paid every two weeks, then the paycheck needs to be multiplied by 26 weeks and then divided by his comment is here 12 months to yield the monthly gross income to qualify for the mortgage loan.
Other income such as overtime income, bonus income, part time income, and commission income is more complicated to qualify. The mortgage loan originator needs to make sure he or she qualifies it the same way the mortgage underwriter will.
Overtime income, part-time income, bonus income, or commission income will have the likelihood of continuing for the next three years.
What the mortgage underwriter is going to request is a verification of employment from Human Resources. On the VOE, it will request to Human Resources representative to state the overtime. It will also ask if other income is likely to continue and the likelihood it will continue for the next three year is very likely:
In the event, if the overtime or other income is last in the most recent year than the previous year, then the most current year overtime income or other income is only used and it is divided by 12 months to determine the monthly income.
If the borrower is self-employed or a 1099 wage earner, two years of tax returns and income as 1099 is mandatory.
Home Buyers who need to qualify for home loans with a mortgage company licensed in multiple states with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.