Myth Buster for Qualifying Income
Welcome to Episode 3 OMGs Mortgage Lounge. Judy Ogden (NMLS #770604), the owner of Ogden Mortgage Group Inc (NMLS #2152903).
One of the myths out there is that you have to have 2 years on the same job to use the income for mortgage loan qualifying. There are some programs that allow for 1 paystub on your current job and 2 yrs work history in that field with no gaps of 30 days or more.
There are programs that allow the use of overtime/bonus income for qualifying if you have received it for 2 yrs, and not necessarily on the same job, but in the same position/line of work. This also includes commission income.
For those that are self employed the general rule is to have had your business open for at least 2 yrs.
There are a few exceptions, if you have been in the same line of work and have had the business opened for only 1 yr. In addition, if you have had your business opened for at least 5 yrs, there are
programs that allow you to qualify using only the most recent tax returns.
For self employed, there are also other programs that are outside of the traditional lending programs, which allow you to use 12 or 24 months of bank statements as a means for qualifying from the deposits. These programs also use a business expense ratio factor (lenders use a standard 50%) of the total deposits as a hypothetical % for business expenses/debts that are not included in the actual total deposits, which consider the ongoing expenses of the business against the allowable deposits. There is also a program that permits the use of a Year To Date P&L as a means to document your self employment income. At, OMG, we are highly experienced with self employed tax returns and the other ways we can help you determine your documentable income so you can get approved for a loan to buy a house. Also, there are a few programs that permit the use of a non-occupying co-borrower that is a relative who earns enough documentable income to support both your debts and their own debts including their housing. The non-occupying co-borrower must meet the credit and score program requirements, but you, as the borrower, do not have to have documentable income in these cases.
If you have plans to relocate, and you will remain with your current employer, you may qualify for a loan approval, or if you secure employment in the new area within the same position you may still
qualify for a loan approval, written documentation from your employer may be required. Also important, to summarize, please remember, do NOT change jobs while you are in the process of
your mortgage loan approval, don’t open a new business while you are in the process of buying a house. There’s a lot to this process to be sure, but rest assured OMG will walk you through each step to make sure you understand exactly what you are doing!
