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Just curious -- for Debt-to-Income calculation, assuming you're paid salary, do lenders look at your current income or an average over time (ie, 2 years)?
I ask because I've been at my current job for 8 months and make significantly more (+23%) than my previous job that I held for 2.5 years.
I would qualify for FHA debt-to-income under my current annual salary, but not if it were averaged with my previous position.
If your income is solely salary, or Guaranteed 40-hour-a-week full time pay, with NO overtime, Bonus, commission, or part-time components, they go by the present salary.
Now with a salary, things that come into play include: are you paid monthly, semi-monthly, bi-weekly? Because those calculations are different.
Some friends could not get a mortgage. They both make close to $100K per year and have for several years but the majority on their income was in commissions. They drove BMW's, Rolex watches, vacations several times a year, good country club, etc.
The lenders would not count their commissions, only their base salaries of about $30K each. They saved for 12 months and came back with larger deposit and had no issues.
Most likely they'll go based on current income, but their calculations take into account a lot of variables. Your best bet is to get preappoved. From experience we didn't get the actual qualified income figure until the underwriting period 5 days before closing.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The problem would come from the kind of work you are doing. Despite the higher salary, 8 months is not long enough to be sure you will be staying there. It will be helpful if it's the same kind of work. Changing careers completely to something you didn't do before for such a short time is a red flag. The money determines the amount of payment you can afford, but not whether will be a good risk.
Some friends could not get a mortgage. They both make close to $100K per year and have for several years but the majority on their income was in commissions. They drove BMW's, Rolex watches, vacations several times a year, good country club, etc.
Too bad they couldn't cut their expenses for a little while and pay for the house in cash.
The problem would come from the kind of work you are doing. Despite the higher salary, 8 months is not long enough to be sure you will be staying there. It will be helpful if it's the same kind of work. Changing careers completely to something you didn't do before for such a short time is a red flag. The money determines the amount of payment you can afford, but not whether will be a good risk.
Gotcha. Same line of work, exact same job title. No gap in between.
Simply changed companies for a variety of reason, but mainly for the 63% increase.
Some friends could not get a mortgage. They both make close to $100K per year and have for several years but the majority on their income was in commissions. They drove BMW's, Rolex watches, vacations several times a year, good country club, etc.
The lenders would not count their commissions, only their base salaries of about $30K each. They saved for 12 months and came back with larger deposit and had no issues.
They should have gone to another lender. As long as there is at least a 2 year history of receiving commission, it can definitely be used for mortgage qualifying. Some jobs are 100% commission, how would these folks get a mortgage??
Too bad they couldn't cut their expenses for a little while and pay for the house in cash.
ignorant move.
I was quoted 3.38% for a 30 year, Im making over 10% on my personal investments.
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