Loan Options
Qualifying starts with how your income is calculated.
Lenders review your earnings to determine how much income can be used for mortgage approval, and to make sure your payment fits comfortably within your financial picture. The goal is simple. Confirm reliable income, so you can afford your home with confidence now and in the future.
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How your income is reviewed.
Gathering the right documents early makes the whole process smoother and more predictable.
W-2 employees are the straightforward case. Income is typically based on your consistent salary or hourly wages.
Self employed and 1099 income needs more documentation. If you are self employed or receive 1099 income, lenders verify stability and long term earning history. Self employed income is calculated from the tax returns of the most recent two years, and it may need additional review to determine the qualifying amount.
The review is conservative by design. Income calculations compare your year to date earnings with your pay structure and your average hours worked.
Income tips worth knowing before you apply.
These are the rules that surprise buyers most often.
Bonus, commission, and overtime need a track record. This income typically requires a 12 to 24 month history before it can be used for qualifying.
A second job needs history too. If you work multiple jobs, the second job generally must have a two year history to count toward qualifying income.
Talk to your loan officer before changing jobs. Employment stability matters. A job change while you are preparing for a home loan can affect approval, so it is best to understand the impact before you make the move.
Documents typically needed to verify income.
Once these are in, your loan officer reviews them and confirms the income that can be used for your qualification.
Two years of personal tax returns. All schedules included.
Two years of W-2s, 1099s, and K-1s. Whichever of these apply to your situation.
Business tax returns if you own more than 25% of a business. Two years of full business returns, with all schedules.
Income is half the picture. Debts are the other half.
Lenders divide your monthly debts by your monthly income to get your debt to income ratio. Run your own numbers and see where you stand.
Run the Debt to Income CalculatorLet’s identify your actual income.
Send us your documents and we will confirm the income that counts toward your qualification. Then you can plan your next step toward homeownership with real numbers.
Check If You QualifyPrefer to talk? Call Austin at (208) 821-0687.