You’ve found your dream home. It has everything you are looking for and you can’t wait to move in and make it your own. But before you can do that, you have to qualify for a mortgage. Mortgage lenders will generally look at three primary factors when considering your income for qualification purposes. Consistency of the income, how long it’s been received, and likelihood that income will continue are factors used by the lender. Lenders look at many different sources of income to help a borrower qualify for a loan. Here are 5 Types of Income For Your Mortgage Application.
1. Employment Income
This is probably the most popular type of income that people think of when looking at types of income. Lenders will verify this type of income through recent pay stubs, T-4s, and verification from your employer.
If you have a salary, lenders will usually accept that salary as your income, but they may average your income if you are an hourly employee. You can also use overtime, bonuses, and commissions, to help you qualify for a loan.
2. Retirement Income
You may not think that people would be applying for a mortgage loan once they’ve retired, but some people do. If you are applying for a mortgage in retirement, you can use your CPP payments and RRSP as part of your regular monthly income. A lender cannot deny borrowers based off their age. So, a combination of pension payments can help you qualify for a mortgage.
3. Support Payments
If you are receiving money from a divorce settlement, such as spousal or child support, it can count towards your income. You will also need to show documentation that the payments are scheduled to last for at least the three more years. You also must show proof that the payments have been coming each month at their scheduled time for a minimum of six months. They want to make sure that future payments will arrive on time and that you won’t struggle with mortgage payments.
4. Rental Income
If you have a property that you rent out, you can use the monthly rent as a form of income. Lenders will add your net income received from your rental properties and add it to your other income. You also must show proof of your rental income, like it being listed on your income tax returns. If the income has been stable for the last two to three years, you will likely qualify for a mortgage.
5. Investment Income
You can use interest payments and dividends from your investments to help you qualify for a loan. You must provide documents showing that you have received interest payments and dividends from the investments for the last two to three years. Lenders will them average the investment income that you have earned for this period of time and use it to help you qualify for a loan.
If you’re applying for a mortgage to purchase your dream home, give us a call at Centum Home Lenders. We will help gather all of your acceptable sources of income, so that you can qualify for a mortgage to buy your dream home. Get in touch with us here and let’s discuss your future!