Mortgage Moment - What Income Counts

Michael Holigan: Today we're going to cover income and what really counts on income. And actually, it all counts. You just have to know how.

We're going to start with the normal salaries. Your base pay, your gross amount. What they're looking for is what you make before taxes are taken out. That's hourly, weekly, monthly or semi-monthly, they don't care how you get paid. They just need to get it all together and they need to know exactly. Don't tell them monthly if you're actually semi-monthly. Take all your W-2's, go in, show them what you do.

Next is overtime. Now they do count overtime. It just depends on which program you go on. If it's conventional or a veteran, what they're going to want to see is a two year history. They want to make sure that you've been doing that in the past. They're going to average that and they're going to say that's how much counts when you're qualifying. On the F.H.A., what they're looking for is a letter from your employer saying how much they expect you to be making on overtime. How long they consider you to be on overtime. Are you going to have ten hours a week or five hours a week. They need something from your employer saying how long.

Commissions and bonuses, different story but pretty much done the same way. They want a two year history to make sure this isn't something that you're new at, that you've been receiving commissions and bonuses in the past, you know how they work. If you make more than 20% to 25% of your income from commissions and bonuses, they want some tax returns to make sure that you're comfortable living this way and that you've done it in the past. That you know how much they expect you to make from the commissions an bonuses.

Last is second jobs. You can't just run out and get a second job to qualify for the mortgage. They want a history that you're used to doing that, that you can work those hours, that you will continue to work those hours and be able to make your mortgage payment.

Now always remember, all income counts, just need to get with your lender, so then how it's done and make sure you tell them the correct way that you make that money.

Episode 017 1995 - 96 Season

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