Qualifying For Home Loan With Overtime Income
Home Loan With Overtime Income:
For those mortgage loan borrowers who work overtime regularly, they can qualify for home loan with overtime income and can use overtime for extra income when applying for a mortgage loan if they had a history of working overtime for the past two years and the overtime is likely to continue. Part Time and Bonus Income can also be used if they had bonus income for the past two years as well and it is likely to continue. Qualifying for home loan with overtime income can be tricky because the mortgage underwriter needs to be convinced that the overtime income is stable and will likely continue for the next three years. Also, when qualifying for home loan with overtime income, the overtime income cannot be in a decreasing trend from one year to another. It needs to be the same or greater on the most current year.
How Can You Qualify For Home Loan With Overtime Income
To provide proof and verification that the mortgage loan borrower has been receiving overtime and bonus income for the past two years is not hard to prove. The mortgage loan borrower needs to provide tax returns, W2’s, payroll records, or have the mortgage lender request a verification of employment, also known as a VOE, from the employer of the mortgage loan borrower. One or more of the documents I just mentioned will be ample proof that the mortgage loan borrower has been receiving regular overtime income or bonus income the previous two years.
Overtime Income Needs To Continue To Qualify For Home Loan With Overtime Income
Nobody can guarantee that overtime income and bonus income will continue and proving that overtime income and bonus income will continue can be challenging. However, many mortgage lenders require this and the only acceptable way is to have the mortgage loan borrowers employer to write a letter on the company letterhead that the employee overtime income and/or bonus income will likely continue at or above the current hours. Many employers are reluctant to write such letter unless it is a mom and pop shop. Getting a letter that overtime income is more likely than getting a letter that bonus income will continue. Many employers are against in writing that bonus income is likely to continue.
Many professions such as fields in law enforcement, public safety, fire fighters, nurses, physicians, and restaurant workers have overtime income consistently.
How Do Mortgage Underwriters Calculate Home Loan With Overtime Income
Overtime income is calculated as follows: If the overtime income is greater the current year than the previous year, the overtime income will be averaged. If the overtime income is less the current year than the prior year, then the overtime income of the current lower income will be used and not averaged.