Continuation Of Income Guidelines On Mortgage Loans

This Article Is About Continuation Of Income Guidelines On Mortgage Loans

The Ability To Repay is one of the most important factors mortgage underwriters take into consideration when underwriting a mortgage borrower.

• Lenders require a past two-year employment work history
• The past two-years job history is important because it shows that the borrower had a history of working in the past two-years
• Job gaps in the past two-years are allowed
• However, underwriters want to see the reason for the gap in employment
• More importantly, mortgage underwriters want to see the continuation of income of the borrower for the next three years
• Mortgage underwriters want to feel confident that the borrower will be able to afford their housing payments

Continuation Of Income Guidelines On Loan Programs

Continuation Of Income Guidelines is the same for all loan programs.

• Continuation Of Income Guidelines means that the borrower’s source of income is likely to continue for the next three years
• Continuation of income is more important than a borrower’s credit scores and/or current income
• Lenders want to feel confident that the borrower is going to be able to make the new housing payment without any stress after they close on their home loan
• What good is it if a borrower with excellent credit and great payment history is not able to afford their new mortgage payment

Lenders always want to know the borrower has the ability to repay their new mortgage payment.

Continuation Of Income Guidelines On Full-Time Jobs

The key question mortgage underwriters want to know is how is the continuation of income of the borrower’s current job.

• What good is it if the borrower was making six figures for the past several years but the income will be discontinued in the coming months
• One of the issues facing many borrowers when applying for a mortgage when retiring is giving notice of their retirement
• If borrowers are planning on using their income as qualified income and are giving notice to their company they are retiring soon, then their income will not continue for the next three years
• This will automatically disqualify the borrower for a mortgage with their full-time income

In these type of cases, the borrower may qualify with their pension income but not full-time income if they are planning on retiring.

Irregular And Declining Income

Mortgage Underwriters are often concerned with irregular and/or declining income of borrowers. It is up to the mortgage underwriter to use their discretion on whether or not to count irregular and/or declining income of borrowers. In most cases, mortgage underwriters will not count irregular or declining income unless the continuation of income for the next three years is likely.

Part-time income, overtime income, and other income are allowed as qualified income if the following factors come into play:

• There is a two-year history of part-time income, overtime income, and/or other income
• The part-time, overtime, and/or other income is not irregular and/or declining
• The likelihood of part-time, overtime, and/or other income is likely to continue for the next three-years

For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, holidays.