What is classified as income for qualifying purposes? Some forms of income that represent revenue to your household may not count as income for qualification purposes. Here are some of the many sources of income and some of the guidelines for using them to qualify for a mortgage. The important thing when it comes to income is to demonstrate consistency and sustainability.
Employment income
If you are an employee of a company or corporation, the basic guideline for income eligibility is that you have been employed for one year with the same employer or
at least one year in the same line of work with no probationary period on the new employment.
Self-employment
If you are self-employed, you can still qualify, but most lenders will require a track record of consistent income. The standard is a two-year average of your net taxable income.
Seasonal income
Seasonal income is acceptable, but you will likely be required to demonstrate sustainability by providing a two or three-year track record. Usually, an average of income over these years will be used for qualifying purposes.
Overtime
If you want to use overtime for your qualifying income, most lenders will want to see a consistent history; typically, a two or three-year track record of your overtime income.
Pension Income
Guaranteed pension incomes are usually acceptable sources of income.
Child Tax Credit
The child tax credit may be considered by some lenders. Ask me for more information if this is income you would like to have considered with your mortgage application.
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Tagged with Income Classification, Mortgage Qualification
BC & Alberta Mortgage Broker
Eva Poulson
When I'm not breaking the knuckles of different lenders for better mortgages for my clients - I'm kidding (or am I?) - you can usually find me visiting with friends or family, writing for this blog, or doing my best to keep from capsizing a dragon boat!