Qualifying For A Mortgage: Income Stability and History

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Thinking about getting a mortgage? One of the things that the underwriter will look at is your income history.  They will not only look at how much money you have made in the past, but how “predictable” that income is and use their best judgement to predict what will happen in the future.

Income History

One thing that most lenders will require is that you have a history of getting a stable income from your job or from other sources – as well as a reasonable expectation that the income will continue to be received in the foreseeable future (usually for the next 3 years).

Most of the time if you have been working at the same job or getting income from the same source for at least two years, that will suffice as “qualifying income”. The qualifying income must be:

  • Recurring
  • Received regularly
  • Received in cash in the form of check, direct deposit, wire-transfer etc.
  • Pay taxes on the income in the form of payroll deductions or through US tax return; and
  • The amount of money is “reasonable and customary” for the line of work or profession

What About Job Changes?

Job changes are not a bad thing – but they will be a factor the underwriter will consider when evaluating your loan. If you have job-hopped for reasons other than advancement or changing careers or you have long periods of unemployment, this could be a red flag for an unsteady work history and income.

If your job history is spotty, expect the underwriter to look at other areas for strength of your application. Depending on what line of work you work in, it is also possible that in certain industries people change jobs more often than other industries and the underwriter will not normally penalize you for that as long as you have demonstrated the ability to maintain a steady income despite the changes.

Have a question about income stability? Be sure to ask your loan officer about this – knowing how an underwriter will look at your application can make all the difference in the world between getting approved or denied.

Justin McHood

Justin McHood is a Mortgage Commentator living in the Phoenix, Arizona area and is happy to answer any mortgage-related questions that you may have.
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Justin McHood is a Mortgage Commentator living in the Phoenix, Arizona area and is happy to answer any mortgage-related questions that you may have.

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