If you’re planning to buy a home in the next year or two, this is important information to know now so that you don’t get caught unawares.
INCOME YOU CANNOT COUNT ON A MORTGAGE APPLICATION with a bank, credit union, or any loan using government money. (You would need a non-conforming loan available through mortgage brokers.)
Tip money that is “under the table” and not declared on taxes.
New self-employment income that is less than 24 months. If you’re newly self-employed, that is not enough time for the underwriter to average your income or see the income trend.
Inheritance, because it is not an ongoing income. However, you can use it for your down payment and/or closing costs.
Lottery winnings don’t count, because they are a one-time windfall. However, you can use it for your down payment and/or closing costs.
Cash income that is not declared on 1040 taxes. You can’t count secret “under the table” income.
Exaggerated income, surprisingly common. The income on your loan application must match your W2, 1099, tax returns. The underwriter always checks and recalculates, so there is no sense in exaggerating on the application.
For the following income, you must have been receiving it for at least two years:
- Part-time work
- Tip income
- Automobile allowance
- Self-employment income
- Gambling income
- This is not a complete list, just some of the most common types of income that require two years of receiving.
This information is taken from Chapter 17 “Income: Qualify Your Earnings Like an Underwriter,” Get the Mortgage You Want Like the Pros.
