Income You Can’t Use on a Mortgage Application

If you plan to buy a home in the near future, it’s best to know ahead of time what type of income is not allowed to be used on a loan application.


  1. Any temporary income that will not continue for at least 3 more years. This would be things like spousal maintenance, child support, L & I, temporary disability income, etc. However, if you will receive any of this type of income for 3+ years more, then it DOES count. (If it ends in four years, it counts.)
  2. Any part-time job or income that is less than 24 months. (Must work part-time for at least 2 years to count.)
  3. Income tax refund. That is one-time income, so it doesn’t count. (Even if you get a refund every year, it doesn’t count.) However, you CAN count it for a down payment.
  4. Inheritance. It’s not income, but you can use it for your down payment.
  5. Any “under the table” money that cannot be verified either by a W2, a 1099, or on your tax returns. If you don’t tell the IRS about the income, then you can’t tell your mortgage lender either.


There is a loan designed for people who work at cash-paying jobs, and for self-employed people who have too many tax deductions to show a sufficient Adjusted Gross Income on their tax returns.

You can get a loan through a mortgage broker (not a bank) that allows bank statements to serve as your income verification. It’s called a “Bank Statement Loan.” You show 12 – 24 months’ bank statements and the deposits are counted as income.

Expect to take a higher interest rate for this type of loan, because it is riskier for the lender.

You will need a down payment of at least 10%.

If you have a question about income qualification, I am happy to answer.

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