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3.1. Types of Income

As you are preparing to qualify for a home loan, it is important to understand how your income will be calculated for qualifying.  Income is viewed differently if you are a W-2 employee as opposed to being self-employed.  It is important to be able to document your previous 2 years of employment and income history. Some items to keep in mind:

  1. Income will be calculated based on the most conservative approach.  It is important to compare your year-to-date earnings to your hourly rate and average hours worked per week.  
  2. To use bonus, commission, and/or overtime income for qualifying you will need to show a 12-24-month history of receipt.  
  3. If you currently hold two jobs, you will need to have been employed with the second job for 2 or more years to use the income for qualifying.
  4. It is important to change jobs as little as possible when working toward qualifying for a home loan.  It is best to speak with your licensed loan officer to review any employment changes you are looking to make before making them.

To have a better understanding of how your income will be calculated, you can enter your information in the W-2 income worksheet by following the link below.

If you are self-employed, your income will be calculated based on your tax returns for the most recent 2 years and good credit.  Self-employed income calculations are best to review with your licensed loan officer.

If you would like help calculating how your annual income, please collect the following documents and send them over to your Loan Officer:

    • 2 years personal tax returns – all schedules
    • 2 years W2s, 1099s, and K1s
    • If more than 25% ownership of any entity – full 2 years of entity returns required with all schedules.

We look forward to hearing from you and helping you determine the income that can be used for your mortgage needs!