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Base Employment Income
(Salary)
Hourly Employees: Multiply hourly rate by
standard work week (35 to 44 hours depending on how your company
pays. The average is 40). Multiply this amount by 52 then divide by 12.
This is your gross monthly salary.
Overtime Income
If you receive overtime, enter the average
amount of your overtime over the past two years but only if your employer
will stipulate that the bonus program will continue.
Bonuses
Count bonus income only if you have received
an annual bonus for the past two years and your employer will stipulate that
the bonus program will continue.
Commissions
If you are counting on commissions to qualify
for a loan, you must have received commission income for the past two years.
Take the gross commissions received during the past two tax years then
divide by 24 and enter the result. This is your average monthly commissions.
Be prepared to demonstrate the commissions by submitting two years worth of
tax returns.
Self Employment Income
If you have been self-employed more than two
years, enter the average monthly income from self-employment. If you have
been self-employed less than two years, you usually cannot use income from
self-employment to qualify for a loan UNLESS you were previously employed in
the same line of work before setting up your own company.
Dividends/Interest
Divide the gross dividends and interest as
reported on your last two tax returns, divide by 24 and enter the result
here. This is your average monthly dividends and interest. If you are using
savings or investments for a down payment, you will no longer be able to
claim the proceeds from the investment as income.
Alimony/Child Support
You do not have to disclose alimony or child
support unless you are counting on these to help you qualify.
Income from Rental
Properties
Rental income is computed on the basis of the
previous two years, unless this is a purchase or you have held the rental
property less than two years. On Schedule E of your tax form, find the net
profit or loss from all properties owned (not just the property you are
financing) for each tax year, then add back the depreciation claimed on each
tax return, total the profit or loss plus depreciation for two years and
divide by 24. This is your net monthly rental income.
If this is a purchase, you may claim up 75%
of the monthly rental income from the property being purchased, but you must
have leases on the rental property that carry over from the present owner.
NOTE: There are some programs that allow you to take 100% of the net rental
income.
If you are refinancing, and you have
owned the property for less than two tax years, you can use 75% of the gross
monthly rental income from the property. Otherwise you must enter the
net rental income (or loss) from your tax returns, averaged over the past
two years as described above.
Other Income
You may include any other income from second
jobs, hobbies or other income producing activities.
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