Home Loan With Income Increase Mortgage Guidelines

Home Loan With Income Increase Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers qualifying and getting approved for a home loan with income increase. What happens if borrowers get a substantial income increase or job promotion? How do mortgage underwriters qualify borrowers for a 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 underwriters average two years of income, or will they go off the current income when qualifying borrowers for a home loan with income increase?

These are common questions that I often get from home buyers and homeowners who are considering refinancing. Credit and income are the most important factors when qualifying for mortgage loans. This article will cover getting approved for a home loan with income increase mortgage lending guidelines.

Can I Increase the Amount of My Mortgage?

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Yes, you can increase the amount of your mortgage under certain conditions. Increasing your mortgage amount typically involves going through a loan approval process and meeting certain eligibility criteria, such as having sufficient income and a good credit score. When considering taking on more debt, it’s important to consider the potential impact on your monthly payments and overall financial situation. Speak With Our Loan Officer for Mortgage Loans

How Can I Increase the Amount I Can Borrow for a Mortgage?

Here are a few ways you might do this:

  1. Refinancing: If your home has appreciated since you bought it, or if you’ve made significant improvements that have increased its value, you can refinance your mortgage for a higher amount.
  2. Cash-out Refinance: Borrowers can do a cash-out refinance, which allows them to refinance their existing mortgage and receive money for the difference between the remaining balance and the new loan amount. This can be used to increase the amount of your mortgage.
  3. Home Equity Loan or Line of Credit: You may be eligible for a home equity loan or line of credit if the value of your home exceeds your mortgage. However, it’s important to remember that taking this step will increase the debt you owe on your home.
  4. Renegotiation with Lender: In some cases, you can negotiate with your current lender to increase the amount of your mortgage, especially if you have a good payment history and the lender sees you as a low-risk borrower.

Importance of Qualified Income When Qualifying For Home Mortgages

Borrowers can have low credit scores and prior bad credit, and as long as they have documented income, they will qualify for a home loan. However, if borrowers have perfect credit and the highest credit scores but have little income or income that is not documented, there is no way they can qualify for a mortgage loan. Poor credit or lower credit scores can be fixed quickly, but income is another matter.

Borrowers income is what decides how much home they can afford and how much they can qualify with home mortgages

Income that is not documented, such as cash income, cannot be used by lenders to qualify for home loans. However, borrowers can qualify for a home loan with income increase if they had a substantial pay hike or a job promotion with a substantial pay increase. The new income will be used for income qualifications depending on the mortgage lender.

How Do Homebuyers Qualify For Home Loan With Income Increase

Home Loan With Income IncreaseAll lenders require two years of tax returns, two years of W-2s, and 30 days of paycheck stubs. The way mortgage lenders qualify income is as follows. Borrowers are unemployed for six months or less and get a new full-time job in less than six months while he or she has gaps in employment, then the new full-time job pay will be used. The previous two years’ wages will not be averaged. The mortgage loan cannot close until the borrower has provided 30-day paycheck stubs from the new employer.

If borrowers have been unemployed for six or more months and get a new full-time job after having six or more months of gaps in employment, borrowers need to be on his or her new job for at least six months as a full-time employee to qualify for a mortgage loan.

The borrower’s current full-time job salary or 40-hour work pay will be used to qualify income, and the past two years’ income will not get averaged in the qualifying income. If a borrower wants to qualify for a home loan with an income increase, the income increase needs to be verified by employment verification. Click here to qualify for Home Loans

Mortgage Guidelines on Multiple Income Increases in The Past Two Years

Suppose the borrower has had multiple increases in income in the past two years and is an hourly worker. In that case, the mortgage underwriter may average the two years’ wages 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 underwriter may use the new income increase as qualified income without having to average the past two years of income.

How to Get a Loan With High Debt to Income Ratio?

Securing a loan with a high debt-to-income (DTI) ratio requires strategic steps to enhance your approval prospects.

Begin by focusing on boosting your credit score, as a higher score can mitigate concerns about a high DTI ratio. This involves timely bill payments, reducing credit card balances, and rectifying errors on your credit report. Another crucial aspect is reducing existing debt, as paying debts demonstrates responsible financial management and lowers your DTI ratio.

Additionally, increasing your income through additional work raises or alternative sources can positively impact your loan application. Consider involving a co-signer with a lower DTI ratio and good credit to strengthen your application further. When exploring loan options, shop around with various lenders, including those specializing in borrowers with higher DTI ratios or offering non-QM loans.

Providing comprehensive documentation of your income, assets, and debts is essential for lenders to assess your financial stability accurately. A larger down payment can also make lenders more amenable to approving your loan despite a high DTI ratio.

Lastly, consider non-QM loans tailored for borrowers who don’t meet traditional mortgage requirements, including those with elevated DTI ratios, as they may offer more flexibility in the approval process. Individuals with a high DTI ratio can still increase their chances of getting a loan by being proactive and working with lenders. By implementing certain strategies, they can improve their chances of getting approved.

Part-Time and Other Types of Employment

Home Buyers who have 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 employment verification by the employer.

Homebuyers who had been working part-time and on part-time status but who got promoted to full-time status can qualify for a home loan with full-time status wages. They do not have to have the previous two years of wages averaged.

Homebuyers who have multiple part-time jobs can include all income from their part-time jobs to qualify for a home loan as long as they have been employed in the part-time jobs for at least two years. Homebuyers told otherwise by mortgage lenders on the topics above, please contact us at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com
. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

Lenders give home buyers a hard time with the above qualification requirements in getting a home loan with income increase because they may have mortgage lender overlays in approving a home loan with income increase. We are available seven days a week, evenings, weekends, and holidays to answer your real estate and mortgage lending questions.

FAQ: Home Loan With Income Increase Mortgage Guidelines

1. What happens if borrowers get a substantial income increase or job promotion? When borrowers experience a significant income increase or job promotion, mortgage underwriters typically qualify them based on their new income. This can positively impact their borrowing capacity and increase their chances of loan approval.

2. How do mortgage underwriters qualify borrowers for a home loan with an income increase? Mortgage underwriters evaluate borrowers’ new income from promotions or substantial pay hikes when qualifying them for a home loan. They rely on documentation such as tax returns, W-2s, paycheck stubs, and employment verification to assess the borrower’s loan repayment ability.

3. Do mortgage underwriters average two years of income, or will they go off the current income when qualifying borrowers for a home loan with an income increase? Mortgage underwriters typically prioritize the borrower’s current income when qualifying for a home loan with an income increase. They may not average the past two years’ income if there’s a substantial pay increase or a transition from part-time to full-time employment due to a job promotion.

4. What if you go from a part-time position and get promoted to full-time with a substantial income increase? If a borrower transitions from part-time to full-time with a substantial income increase, mortgage underwriters may qualify them based on their new full-time wages. In such cases, they typically do not average the previous two years’ income.

5. How can I increase the amount of my mortgage? Borrowers can increase their mortgage amount through options like refinancing, cash-out refinancing, home equity loans, or renegotiating with their lender. However, meeting eligibility criteria such as income requirements and creditworthiness is crucial.

This blog about Home Loan With Income Increase Mortgage Guidelines was updated on March 22nd, 2024.

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