Click on checklist to download a comprehensive list of documentation needed for the typical loan application
For self employed persons
A 2 year history of employment in the same line of work is required in most cases. Any gaps in employment must be explained and documented.
Exception: If you were attending school or spent in the military, that time is included in the two year requirement.
Check out the required documentation
The requirements for calculating and determining which income can be used to qualify.
Current salary is used as effective income
If the hours do not vary, income is calculated based on the currently hourly rate.
If hours vary, a 24 month average of income is used.
Income received from active duty, Reserve or Notional Guard service is included in qualification as long as it is likely to continue.
Military education benefits ARE not included for qualifying.
Can be used to offset a monthly car payment only if it has been received for the previous two years
Can be considered qualifying income if it has been received for at least 1 year and is likely to continue.
An average of the previous year and Year To Date is used to qualify
A two year history is recommended but 12-24 months is acceptable if it is shown that it is likely to continue
A history of working a part time job uninterrupted for 2 years is preferred but a shorter time period (no less than 12 months) can be acceptable there are other positive factors and the job must be likely to continue.
An average of the income is used for qualifying.
An individual is considered to be self employed if he/she has 25% or greater ownership interest in the business.
Self employment income of less than two years will only be considered if there is at least a one year history and it can be documented that he/she was employed in the same line of work as the business for at least two years.
A 24 month average of the income, as reflected on tax returns, is used for qualifying.
If the income is lower for the most recent tax return, then a one year average of the lower income is used.
Allowed as long as the new rental income is documented
A 24 month average from the net rental income shown on the tax returns is used..
Where there is no history of rental income, 75% of the verified rent is used to offset the housing/property obligations (taxes, ins, HOA).
Any negative rental totals will be included as a debt/liability for qualification purposes.
Income can be used for qualifying.
Copy of the "award" letter is required to verify amount due along with bank statement verify the receipt of the funds
Must have at least a guarantee of continuing for 3 years from the closing date.
If the amount fluctuates, an average of up to 2 years can be used.
Some non taxable income can be grossed up for qualification purposes.
You must provide documentation to verify the amount of benefits awarded and that the income is to continue for at least 3 years from the closing date.
Copy of the "award" letter with the expiration date of the benefits is required
A copy of the "award" letter is required. If no expiration date is listed, then it is assumed that it will continue for at least 3 years.
Some non taxable income can be grossed up for qualification purposes.
Can be used as qualifying income if
Canceled checks, deposits slips or bank statements are required to document receipt of the income for the previous 6 months
*This overview is not all inclusive and does not include all guidelines, situations or sources of allowed income. Contact us or your lender for additional information that applies to your situation.
Laura Borja | Senior Mortgage Consultant | NMLS#199107
Cell: (619) 992-4061
laura@lauraborja.com
27271 Las Ramblas ste 350 Mission Viejo CA 920691
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Ocean Lending Home Loans Inc. NMLS ID #1626788 (www.nmlsconsumeraccess.org). 27271 Las Ramblas ste 350 Mission Viejo CA 92691 (888) 508-5030. All rights reserved. This is not an offer to enter into an agreement. Information, rates, & programs are subject to change without prior notice and may not be available in all states. All products are subject to credit & property approval. Ocean Lending is not affiliated with any government agency. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act License# 41DBO76602 and Finance Lender Law License #60DBO71981.