Are you considering purchasing a new home and wondering what types of income sources mortgage lenders consider when evaluating your eligibility for a loan? AKA, what counts as income? Look no further! In this comprehensive blog post, we will explore a wide range of eligible income sources, shedding light on the nuances of each. By the end, you’ll be not only educated but also impressed by the depth of knowledge you’ve gained.
1. Employment Income: The most common source of income, including your regular salary or wages. Be prepared with pay stubs and employment verification to demonstrate your financial stability.
2. Self-Employment Income: If you’re a business owner or self-employed, your income is on the table. Lenders typically require tax returns and financial statements for verification.
3. Rental Income: If you’re a property owner, rental income from your properties can be considered. Ensure you have rental agreements and documentation to substantiate this income.
4. Retirement Income: Pensions, 401(k)s, IRAs, and Social Security benefits are all fair game. Lenders may request statements and benefit award letters to confirm this income.
5. Investment Income: Income from investments, such as dividends, interest, and capital gains, can be counted. Be ready with documentation of your investment accounts and income.
6. Alimony and Child Support: If you receive alimony or child support, lenders may consider this income with court-ordered documentation as proof.
7. Military Income: Active-duty and reserve military personnel can include military income. Keep Leave and Earnings Statements (LES) on hand for verification.
8. VA Benefits: Veterans can leverage VA benefits, including disability compensation and education assistance. VA award letters and statements are vital for verification.
9. Tips: In professions like the service industry, tips are a significant part of income. Maintaining detailed records and tax returns is crucial for tip income verification.
10. Trust Income: Income from trust funds is an option. Have trust statements and tax returns ready to demonstrate this source of income.
11. Unemployment Benefits: If you’ve received unemployment benefits, document them for verification.
12. Part-Time Income: Part-time work in addition to full-time employment can count. Pay stubs and employment verification may be necessary.
13. Bonuses and Commissions: Extra income earned based on performance or sales. Keep records such as pay stubs and employment documents handy.
14. Interest and Dividend Income: Earnings from savings accounts and investments are valuable. Show bank statements and tax returns to verify this income.
15. Social Security and Disability Payments: Regular payments from these programs can be considered. Provide award letters and bank statements for verification.
16. Leave Payments: Payments for accrued vacation or paid time off can be included. Keep pay stubs and employment records accessible.
17. Foster Care Payments: If you provide foster care, payments received are valid income. Documentation from the responsible agency is essential.
18. Rental or Investment Income: If you have rental properties or investments, this income source counts. Rental agreements, bank statements, and tax returns can be used for verification.
As you can see, lenders assess various income sources when determining your mortgage eligibility. Each source has its specific requirements, so communication with your lender is vital. Providing the necessary documents will help you present a strong case for your ability to repay the loan.
Remember, lenders also evaluate the stability and consistency of these income sources, so being organized and prepared is key to securing that dream home. Armed with this knowledge, you’ll impress lenders with your financial acumen and increase your chances of securing the mortgage you desire. Happy house hunting!