Income & Job History

Income & Job History

Another major aspect of the mortgage pre-approval process is documenting your job history and income structure.

Long gone are the days of undocumented or “stated” income mortgage loans. Mortgage underwriters are now required to diligently evaluate your income and job history to paint a picture of your credit worthiness and your ability to repay your loan. They will rely on specific guidelines for employment and acceptable debt to income ratios.

Employment History & Income Facts to Remember

  • A consistent 2 year job history is required (unless a student)
  • All income will be verified via tax returns and/or pay stubs
  • Tax Returns all must be filed with the IRS for most current & previous years and will be verified by underwriter with the IRS
  • Self-employment income requires more documentation including business tax returns
  • For W2 jobs must have 30 days of paystubs before loan approval
  • Part-time & 2nd jobs require 2 years at same job or can’t utilize income from that job
  • Over time & bonuses can be utilized if a consistent, stable 2 year history can be documented & employer verifies a “likelihood it will continue”
  • Lapse in employment for education must be documented with school transcripts
  • Social security and pension income can be utilized
  • Child support & Alimony received can be added to your income if it has been received for the previous 12 months & will continue for 36 months
  • Child support & Alimony paid must be included in your liabilities
  • Your job must have a likelihood of continuing which your employer will be required to document
  • Rental income can be used on refinances only if it is reported on previous years tax returns. It can be used for purchases
  • Employer reimbursed expenses must be documented with 2 year history

Common Income Issues

If you are a regular W-2 or salaried borrower, your income calculation is relatively simple. However, if any of the following apply to your situation, be sure to fully disclose these to the Mass Mortgage Buddy as they will have an impact on how the mortgage underwriter views your actual income

  • Tips as part of income – can’t be used unless reported
  • Seasonal Work
  • Multiple Jobs
  • Contract or 1099 work
  • Self-Employment Income
  • Rental property Income or Loss
  • Investment Income or Loss
  • New Employment

Important: A mortgage is a legal financial agreement. Every piece of information and documentation will be verified. The mortgage industry takes fraud very seriously. If you are not ready to be pre-approved at this time The Mortgage Buddy will work with you to prepare you for when you are.