To qualify for a mortgage loan, the mortgage lender will evaluate your credit scores, credit history, credit report, debts, liabilities, assets, and income. All of these factors will play an important role in your mortgage loan approval and closing on your loan. However, the most single important factor is income. You can still get a mortgage loan approval with bad credit but you cannot get a mortgage loan approval with little or no income. Income, by far, is the most important factor in your mortgage loan approval. You can have credit scores north of 800 but with no income documentation, there will be no loan approval. There are many sources that can be used for income such as social security income, pension income, part time income, bonus income, seasonal income, child support, royalty income, and other sources of income for mortgage qualification.
Extended periods of unemployment
If you have been unemployed 6 months or less and are now employed with a new employer, you will qualify for a new mortgage as long as you can provide a recent paycheck stub and the mortgage lender can get a verification of employment from your human resources department stating that your chances of future employment is good.
If you have been unemployed for more than six months, you need to be on your new job for at least six months before you can qualify for a mortgage loan.
Part time and bonus income
Part time and bonus income can be used as additional monthly income if and only if the mortgage loan borrower has been receiving part time income and/or bonus income for the past 24 consecutive months.
Part time and/or bonus income that is not quite 24 months might be used if the mortgage loan borrower can get a letter from human resources guaranteeing that the borrower’s part time income will continue for the next year. Many human resources departments will be hesitant in stating such verbage on a verification of employment.
Child support, royalty income, and other non traditional income
Child support income, alimony income, royalty income, and other non traditional income like monthly subsidies from lawsuits can be used as additional monthly income as long as it will continue for the next three years. Proof and letters of verification will be required.
Social security income and pension income, and disability income
Social security income and pension income can be used for income in mortgage qualification. Social security income are normally grossed up by 25%. For example, if your social security income is only $1,000 per month, that income can be grossed up by 25% to $1,250 for mortgage qualification purposes. If your pension income is not taxed, your pension income can be grossed up by 25% as well.
Disability income can also be used and grossed up by 25%.