Bonus as income? (loan, approved, financial, loan)

[peonygal34]

Bonus: I am in financial industry and much of my compensation is bonus related. Since two years with the company, the first year is training so no bonus with income $65K, but second year (last year) I got $15K bonus during the worst time for bonus since stock market crush Dec 2008, so with this coming year end (1 mth more!) with much brighter wall streets than last year, I will be expected more than $15k bonus, and I know it but of course no company in the right mind can write me a letter guranteeing it. But I do have an offer letter stating that I will receive a bonus given with conditions (performance etc I am the top performer!). In order to quality for the loan, I have to include the bonus as income, and I need to close before the second round of bonus arrived next month!! Any advice?


What is the DTI for current market loan approval?
score: 730

[charlesclark]

Bonus income is counted only if you have 2 years of bonus income history. The lender will take the average of those 2 years and use that as the bonus income.

"What is the DTI for current market loan approval?"

That depends. FHA Guidelines say 43%, Conventional is 45%. You can get approved for a loan with DTI way higher-as much as 50% however, depending on compensating factors.

A word of caution however.

These guidelines were set up to help keep buyers from buying more than they can pay for. If you can stay within these ranges chances are you won't have trouble repaying the loan.

[dazzleman]

It's generally not a great idea to factor your bonus into your income when you are determining what you can actually afford. That could lead to you being forced to go into debt during the year to meet living expenses, relying on your bonus to pay it off. Bonus compensation is high risk and can be reduced or denied right up to the last minute. Better to allow your bonus to be gravy, and plan your daily expenses around your base pay.

But if you want to include your bonus for the bank's affordability analysis, you can talk to HR about it, and they can write you a letter that could allow at least a portion of the bonus to be included. I have seen that done.

[SmartMoney]

Bonus income can be used with documented receipt for two years and the employer will verify it is likely to continue. Not "will" or "guarantee," but likely to continue.