Income Income is one of the most important variables a lender will study, because it is used to repay the loan. Income is reviewed for the type of work, length of employment, educational training required, and opportunity for advancement. An Underwriter will look at the source of income and the likelihood of its continuance to arrive at a Gross Monthly figure. Salary and Hourly Wages - Calculated on a gross monthly basis, prior to income tax subtractions. Part Time and Second Job Income - Not usually considered unless it is in place for 12 to 24 straight months.
Lenders view part time income as a strong compensating factor.
Commission, Bonus and Overtime Income - Can only be used if received for two previous years. Further, an employer must verify that it is likely to continue. A 24 month average figure is used. Retirement and Social Security Income - Must continue for at least three years into the future to be considered. If it is tax free, it can be grossed up to an equivalent gross monthly figure.