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An Underwriter View of Income

Income verification is a basic part of applying for a home loan. But there's more to providing proof of income than just handing over a couple of paystubs. It is most important to show stability in the income you are using to qualify for a mortgage.

You may be a recent graduate, for example, who has landed your dream job. It pays well, and you are excited to start your new career and to purchase a new home. But no matter how much you are earning, you may be turned down for a mortgage if that income isn't stable.

In normal cases, verifying your income will require recent paystubs for up to 30-90 days, along with a W-2 from the previous year. But in the case of new employment, that may not be available. In these cases, you'll have to offset the concern an underwriter will have about the short duration of your income. You may need to produce a strong verification of employment ("VOE") along with an employment contract demonstrating your income is likely to continue. If you've worked throughout your schooling, two years of tax returns may be needed to show consistency of income regardless of the source.

Keep in mind, the goal is to demonstrate stability of income. Doing so will reduce the risk in the lender's mind about your ability to repay the loan. Other factors to consider: if you are purchasing well below what you can afford "on paper", that may mitigate concerns about the freshness of your new employment digs. Further, if you have strong reserves (liquid savings or investments), that will help offset anxiety over your newer income stream.

If you have questions about types of income, how it may be calculated for your particular case, or anything else, I'm here to help! Contact me today.

Brian Harris

Brian Harris  Get In Touch