The more income you can bring to the lender, the more money you’ll be able to borrow for your dream home. You may not realize it, but there are many income sources, not just a paycheck, that you can use to qualify!
1. Alimony and Child Support
If you receive alimony or child support, you can use it for qualification, but you’ll have to show that the income will continue for at least three more years. You’ll also need court documents, such as a copy of divorce decree or a written agreement describing the payments.
2. Boarder or Rental Income
If you have a rental unit, either on your property or at another location, you can use this income for qualification . You’ll need to obtain documents of the boarder’s or renter’s residency and show documentation of the income for at least the past 12 months.
3. Capital Gains
If you profit from the sale of property or an investment, you can use this income, called “capital gains,” to qualify. Because these are usually one-time incomes, they are not used as part of your monthly earnings. To use this income, you’ll need a two-year history of tax returns that verifies the amounts earned, which will be used to generate an average income.
4. Disability Benefits
Anyone receiving long-term disability benefits can use this income for qualification, but you need a copy of the policy or benefits statement from the payer, which could be an insurance company or employer. Most long-term disability payments will not have a specific expiration date, but you’ll still need to verify that the income will continue.
5. Employment Offers
If you have received an offer for employment , but haven’t actually started working, you can use this future income to qualify for a loan. The loan can even be delivered before you start, but the lender will need to review an official statement of the employment offer, which should include rate of pay and expected start date.
6. Foster Care Income
You can qualify using income from a state or county that is intended for the support of foster children. The lender will need to see foster-care income verification, including letters from the organization that supplies the funding. You’ll need to have been receiving this income for at least two years in order to use it towards qualification.
7. Housing Income
Many people receive housing income from their job, which is not a part of their regular pay. This income can be used to qualify, but you’ll need to show that this income has been received for the past 12 months and will continue for the next three years or more.
8. Non-Occupant Borrower Income
It may be possible to use the income of a borrower who will not live in the residence being purchased. The non-occupant’s income can be used to offset certain weaknesses in the occupant’s borrowing power, such as low credit scores or high debt-to-income ratio.
9. Notes Receivables
If someone owes you money for a business transaction, you can use this income to qualify. You’ll have to verify that the income will continue for a minimum of three years, and you’ll need a copy of the note to establish the amount, as well as the length, of the payment.
10. Public Assistance
There are many forms of public assistance, so if you receive any at all, you deserve to use this income for qualification. You’ll need to document the public assistance income with letters or information from the agency that pays you, and you’ll have to verify that the income will continue for three years.
11. Pensions and Annuities
After you retire, you may be receiving income from pensions or retirement benefits. To use this income to qualify, you need letters from the organization, copies of retirement award letters, federal income tax returns, and other verification documents. The income can come from many sources, including a 401(k), IRA, or Keogh retirement account.
You may be receiving royalty income from work you have done in the past, and this income can be used for qualification. However, be prepared with copies of the contract, agreement, or statement that confirms the income. The information will need to include regular amount, as well as the frequency and duration of the payments.
13. Social Security
Social Security payments generally don’t have an expiration date, but you’ll need to verify that the remaining term is going to continue for another three years. Social Security used to qualify can be retirement, disability, survivor benefits, and Supplement Security Income.
Working for tips can be a great way to earn a high-quality income, and this money, while perhaps inconsistent compared to a regular wage, can be used for qualification. Bring a complete 1005 form or a paystub, as well as an IRS W-2 form to qualify. You’ll need to verify this income for the past two years,
15. Trust Funds
To use a trust-fund income, you must confirm the amount, frequency, and duration, and you’ll have to prove that the income will continue for another three years.
16. Unemployment Benefits
You can use your unemployment benefits for loan qualification, but you’ll need to have received these payments for at least two years prior to the loan. Seasonal unemployment can be used, but you’ll need to verify that the seasonal layoffs are likely to continue.
17. VA Benefits
You can also used your benefit payments from the VA to qualify for your loan. However, be sure to bring a document of receipt along with a letter of distribution. The income will also need to continue for three years. Education benefits from the VA, however, cannot be used for mortgage qualification because these payments are offset by the cost of education.
Using Alternate Sources to Get You Approved
With San Diego Purchase Loans, you can use all your potential incomes to qualify for a mortgage. We’ll go through all the details to help you get approved for an affordable loan.
Whether you are in the height of your career or using retirement incomes, we’ll take a common-sense approach to your mortgage approval!