What Types of Income will a Mortgage Lender Consider?

If you’re planning to buy a new home without cash in hand, you’ll have to take out a mortgage. Lenders will assess your credit and ability to pay before deciding whether to approve your request for a loan and figuring out how much money to lend you.

Lenders have their own guidelines regarding what forms of income qualify for a mortgage – there’s no one list for all. Generally, generally are looking for income that is steady and verifiable.

No matter the type of income, whoever your lender, you will likely have to provide additional documentation to support your application. You’ll have to show that you’ve received each form of income for a minimum amount of time and perhaps provide proof that you expect to continue to benefit from these income sources for at least the next few years.

Earning from Work

The income from your full-time and/or part-time job(s) will be assessed by your mortgage lender. That might mean hourly earnings or a salary, and possibly bonuses, overtime pay, tips, or commission income. If you have a second job or a side gig, you can include that income on your mortgage application, as long as you have official, supporting documentation.

You’ll be required to provide W-2s, W-9s, and other documentation so the lender can verify your income. If you’re self-employed or a large percentage of your income comes from commission, you might have to provide one or more years’ worth of documentation. The lender will look to see that your earnings are reliable and that you’ll be able to keep up with your mortgage payments.

If you work for a foreign corporation or government and you get paid in a foreign currency, you can include that income on your mortgage application. If you have a partial ownership stake in a business, you can report income from that venture.

Other Forms of Income

You might receive money on a regular basis from one or more other sources. Those funds can help you qualify for a home loan, even if you have a modest salary or you’re not working at all.

You can include alimony, child support, foster care income, military income, VA benefits and public assistance on your mortgage application. If you’re not working, you might qualify for a home loan based on your retirement income, Social Security payments, severance package, or disability benefits. You can also include royalties, interest, dividends, and/or income from a trust.

Include All Forms of Income on Your Mortgage Application

Your debt-to-income ratio and ability to cover monthly payments will determine if you’ll be approved for a loan. Including all sources of income on your application can increase your chances of getting the mortgage you need to buy your dream home. If you have any questions about which forms of income you can include or about the types of documentation that are required, contact the lender.

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Adapted from RIS Media.