Tips for Mortgage Applications With Uneven Income, Part 2

In part one of this two-part blog series, we went over some of the basics on obtaining a mortgage if you don’t receive a traditional form of income. There are many people who fall into this category, whether it’s variable income, complex income or some other type based on the gig economy and numerous independent contractor jobs out there today.

At Primary Residential Mortgage, we’re happy to help you with understanding and qualifying for many of our mortgage loan options, even if you don’t receive a traditional salary or even work a standard hourly-wage job. In today’s part two of our series, we’ll go over some of the general tips we offer those in this situation for how to best position themselves and their finances for a mortgage application, plus some of the unique details they may have to deal with as they move forward in the process.

Improving Credit

One area that doesn’t really change at all from a standard income situation: Credit, which remains a vital factor in any mortgage application regardless of your income type. In fact, because income might be a less reliable source of determining your ability to repay a mortgage, credit may take on an even larger role than normal.

For this reason, it’s vital to try and have as high a credit score as possible – at least 700 if you can, though options may be available below this. If your score is significantly lower than this, speak to one of our loan officers for general tips on limiting your debt and raising your score ahead of applying for a mortgage.

Down Payment Savings

Another area that is very important for a mortgage application without a fixed income is your down payment, which will help limit the risk the lender is taking by loaning money to you. There are a few different approaches to ensuring you have a substantial down payment amount, including borrowing against investment accounts or other saving methods. In addition, one option to consider here is the rent-to-own situation, where your rental payments can be increased slightly over the previous months or years to help you build your down payment over time.

Paperwork Details

Now, one big area that may vary somewhat from a traditional income loan is the paperwork you have to fill out. Some areas will be the same here – tax returns for at least two years, proof of income in the form of tax forms, bank statements and others, plus any income investments or assets. You should also bring information on your previous rental showing you’ve made payments on-time.

In addition, however, you will need to offer an explanation of your unusual income trends and why a lender should not be concerned about them when loaning to you. Finally, you’ll have to sign a Form 4506-T. This allows the lender to request a copy of your tax returns, which allows them full comfort when evaluating your finances.

For more on obtaining a mortgage despite a non-fixed income, 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.