When it comes to getting a mortgage, one of the most important factors that lenders consider is your income. But what exactly do lenders count as mortgage income? In this article, we will explore the different types of income that lenders consider when assessing your mortgage application.
1. Employment Income
Employment income is the most common type of income that lenders consider when assessing a mortgage application. This is the income you receive from your job, and it includes your salary, wages, and bonuses. Lenders typically require that you have been employed for a certain period of time, usually two years or more, in order to qualify for a mortgage based on your employment income.
2. Self-Employment Income
If you are self-employed, your income will be assessed differently than if you are employed by someone else. Lenders will typically look at your net income, which is your gross income minus your business expenses. In order to qualify for a mortgage based on your self-employment income, you will usually need to provide at least two years of tax returns and financial statements.
3. Rental Income
If you own rental property, the rental income you receive can be counted as mortgage income by lenders. However, lenders will typically only count a portion of your rental income towards your mortgage application, as they will also take into account your expenses related to the rental property, such as property taxes, insurance, and maintenance costs.
4. Investment Income
If you have investment income, such as dividends or interest from stocks and bonds, this income can also be counted by lenders when assessing your mortgage application. However, lenders will typically only count a portion of your investment income, as they will also take into account any fluctuations in the stock market or other factors that could affect your investment income in the future.
5. Pension Income
If you are retired and receiving pension income, this income can also be counted by lenders when assessing your mortgage application. However, lenders will typically require that you provide documentation that shows the amount and duration of your pension income.
6. Child Support and Alimony
If you receive child support or alimony payments, these payments can also be counted as mortgage income by lenders. However, lenders will typically require that you provide documentation that shows the amount and duration of these payments.
7. Other Sources of Income
There are other sources of income that lenders may consider when assessing your mortgage application, such as disability payments, social security benefits, and rental income from a roommate. However, it is important to note that not all lenders will consider these sources of income, and the amount that they count towards your mortgage application may vary.
Conclusion
When it comes to getting a mortgage, your income is one of the most important factors that lenders will consider. While employment income is the most common type of income that lenders consider, there are other sources of income that can also be counted towards your mortgage application. If you have any questions about what types of income lenders will consider when assessing your mortgage application, it is always a good idea to speak with a mortgage professional.