Qualifying For Home Loan With Income Increase
Home Loan With Income Increase:
What happens if you get an substantial income increase or job promotion? How do mortgage loan underwriters qualify borrowers for home loan with income increase? What if you go from a part time position and get promoted to full time with a substantial income increase? Do mortgage loan underwriters average two years of income or will they go off the current income when qualifying borrowers for home loan with income increase? These are common questions that I get asked often from home buyers and homeowners who are thinking of refinancing. Credit and income are the most important factors when it comes to qualifying for mortgage loans. You can have low credit scores and prior bad credit and as long as you have documented income, you will qualify for a home loan. However, if you have perfect credit and the highest credit scores but if you have little income or income that is not documented, there is no way you can qualify for a mortgage loan. Poor credit or lower credit scores can be fixed rather quickly but income is another matter. The home buyers income is what decides how much home they can afford and how much they can qualify. Income that is not documented such as cash income cannot be used by mortgage lenders to qualify for a home loan. However, borrowers can qualify for a home loan with income increase if they had a substantial pay hike or a job promotion with a a substantial pay increase. Depending on the mortgage lender, the new pay will be used for income qualifications.
How Do Home Buyers Qualify For Home Loan With Income Increase
Mortgage lenders require two years tax returns, two years W-2s, and 30 days paycheck stubs. The way mortgage lenders qualify income are as follows on FHA Loans:
- If the borrower has been unemployed for six months or less and gets a new full time job in less than six months while he or she had gaps in employment, then the new full time job pay will be used and the previous two years wages will not be averaged. The mortgage loan cannot close until the borrower has provided 30 days paycheck stubs from the new employer.
- If the mortgage loan borrower has been unemployed for six or more months and gets a new full time job after having six or more months in gaps in employment, the borrower needs to be on his or her new job for at least six months as a full time employee in order to qualify for a mortgage loan. The borrower’s current full time job salary and/or 40 hour work pay will be used to qualify income and the past two years income will not get averaged in qualifying income.
- If a borrower wants to qualify for home loan with income increase, the income increase needs to be verified by a verification of employment . If the borrower has had multiple increase in income in the past two years and is an hourly worker, then the mortgage underwriter may average the two years wages in using an average income. If the borrower has had a substantial wage increase or went from hourly to salary employment status due to a job promotion, the mortgage loan underwriter may just use the new income increase as qualified income without having to average the past two years of income.
- Home Buyers who has been working as a temp for a company and got a full time job offer letter and started to work full time with the job they have been working as a temp can qualify for a mortgage loan with the new full time wages and a verification of employment by the employer.
- Home Buyers who had been working part time and on part time status but who got promoted to full time status can qualify for home loan with full time status wages and not have to have the previous two years of wages averaged.
- Home Buyers who have multiple part time jobs can include all income from their part time jobs to qualify for home loan as long as they have been employed on the part time jobs for at least two years.
If you are told otherwise by mortgage lenders on the topics above, please contact us at 262-716-8151. Mortgage lenders that give home buyers a hard time with the above qualification requirements in getting home loan with income increase is because they may have mortgage lender overlays in approving home loan with income increase. We are available 7 days a week, evenings, weekends, and holidays to answer all of your real estate and mortgage lending questions.