Tips for Mortgage Applications With Uneven Income, Part 1

In today’s modern economy, more and more people are obtaining income through non-traditional sources. From gig workers to independent contractors and more, the pool of people who don’t work a traditional 9-5 job continues to grow every year.

At Primary Residential Mortgage, we’re here to offer numerous mortgage loan programs with fantastic mortgage rates for a variety of clients, including those with non-traditional forms of income. Two types that are generally considered here are known as variable income and complex income – how do these compare, and what are some tips we can offer on obtaining a great mortgage despite uneven or unusual income sources? This two-part blog series will go over everything you need to know.

Variable Income Vs. Complex Income

Firstly, let’s view a basic primer on these two terms for unusual income sources, which generally refer to the following:

• Variable income: Gig workers, freelancers, independent contractors and those who virtually never receive a steady paycheck from the same company consistently.
• Complex income: Often refers to those who do earn salaries, but also can earn other performance benchmarks like overtime, commission, banding or others. This category may also cover those with hourly incomes or those who have become equity partners in their business and receive income differently.

Similar Practical Outcomes

Now, it should be noted that some in the mortgage industry will use these terms interchangeably, or others like “unusual income.” While this may be in error technically, it’s usually not a problem – this is because the practical outcomes for each type are relatively similar. Mortgage lenders will look at the situations in many of the same ways, with some variation depending on your circumstances, but the way you should proceed during your application or other stages is pretty much the same.

Our subsequent sections will go over the steps to take if you fall into these categories.

Income and Debt Documentation

For starters, no matter your income source (or sources), do your very best to document all income and debts over at least the last two years. Lenders need to see this sort of history, especially from those who do not have a steady paycheck coming in.

Calculate both base income and any major dips in income. If you’re a seasonal worker of any kind, prepare yourself for questions about this and be ready to share further specifics. In addition, get as good an idea as you can of your debt-to-income ratio, or DTI, which refers to the monthly debt payments you make compared to your average monthly income over this two-year period.

For more on obtaining a mortgage despite uneven income sources, or to learn about any of our mortgage rates or home loan services, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.