Income overview

Income overview

Stable income is considered the following:
  1. Verified gross monthly income from all sources that can reasonably be expected to continue for at least three years
  2. Income History
  3. Proof of recent graduation from degree or vocational training program
  4. Re-Entry into the work force
    1. Example – someone who stayed home after the birth of children for several years
    2. Proof of prior work in same line and back to work for minimum of 6 months
  5. Income may be considered unstable for the following reasons:
    1. No history
    2. Income is not expected to continue for three years
    3. Source is from an unproven or highly volatile source such as capital gains, dividends/interest, etc.
    4. Self employment, commission, overtime, or bonus income has a declining trend over several years
  6. A review of the borrower’s 1040 tax returns should be performed only when the borrower:
    1. Earns 25% or more of his or her income from commissions;
    2. Is employed by family members;
    3. Is employed by interested parties to the property sale or purchase;
    4. Receives rental income from an investment property (only one year of tax returns is required unless the borrower meets one or more of the other conditions in this list);
    5. Receives income from temporary or periodic employment (or unemployment) or employment that is subject to time limits, such as a contract employee or a tradesman;
  7. Receives income from capital gains, royalties, real estate, or other miscellaneous non-employment earnings reported on IRS Form 1099;
  8. Receives income that cannot otherwise be verified by an independent and knowledgeable source;
  9. Uses foreign income to qualify;
  10. Uses interest and dividend income to qualify;
  11. Uses tip income reported on IRS Form 4137 that was not reported by the employer on the W-2 to qualify; or
  12. Receives income from sole proprietorships, limited liability companies, partnerships, or corporations, or any other type of business structure in which the borrower has a 25% or greater ownership interest.

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