FHA Mortgage Income

Income for a mortgage is one of the most important factors when qualifying for a FHA Mortgage or being approved for a FHA Mortgage loan that is issued by the Federal Housing Administration. The other major factors that are considered for a FHA Mortgage approval are the borrower’s liquid assets, the loan to value of the subject property, an appraisal showing a minimum of the comparable sales within the last 90 days that support the sales price of the home, the borrower’s work history, the borrower’s debt to income ratio and finally the borrower’s credit scores.

There are three main types of income for a FHA Mortgage loan and several ancillary types of income that can be used for a FHA Mortgage loan to satisfy FHA Mortgage underwriting guidelines.

The three main types of income for FHA Mortgage approval are W-2 income or salaried income, commission income that can either be W-2 income or 1099 income, and finally bonus income that is typically part of a FHA Mortgage borrower’s W-2 income.

There are several types of ancillary income that can be used to qualify for a FHA Mortgage, these include but are not limited to: child support, social security income, pension income, alimony, spousal support, disability income, annuity income, interest income, dividend income, rental income, military retirement income, and note income.

Of the three major types of income used to qualify for a FHA Mortgage the most difficult one to asses of salary. bonus, and commission income is the last one, commission income. That is why FHA Mortgage guidelines stipulate that any commission income used to qualify for a FHA Mortgage generally must be supported by at least two year’s filed personal tax returns. Furthermore, the commission income must also be reflected on the borrower’s most recent two paycheck stubs to show that the commission income is a continuing source of income.

It is also important to note for FHA Mortgage approval that the income needs to be steady or better yet increasing year over year. If there is a significant decline in the commission income there needs to be a sufficient letter of explanation as to what caused the decline and that it will not further decline in the future.

In some cases FHA Mortgage approval may use only one year of tax returns if the borrower went from salaried income to commission income and remained in the same position with the same company.

One final note these FHA Mortgage commission income guidelines only apply if commissions account for more than tweney-five percent of the borrower’s gross annual income.

 

 

 

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