Tag: overtime income

How do I calculate overtime income on a conventional loan?

Answer: If your lender is willing, and the trend is increasing, the most amount of income you could use for OT for a borrower would be your 2018 + YTD approach.  The income is trending up and appears consistent, but the overall decision to use any specific average is up to the lender.  The highlighted […]

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FHA – Overtime Income History: Is there a way to use overtime income if the borrower does not have a full two-year history?

Answer: Per the guideline below, FHA will allow the use of Overtime income even if it hasn’t been earned for a full two years. See the details below. Reference: 4000.1, II, A, 4, c v. Overtime, Bonus and Tip Income (TOTAL) (A) Definition: Overtime, Bonus and Tip Income refers to income that the Borrower receives in addition to the […]

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VA – Overtime Income: If we have fewer than 2 years’ overtime income, is it an automatic denial with VA or is there some flexibility? VA Chapter 4 Changes – Chart

Answer: VA wants to see a 2-year history of overtime (see guideline below).  Note that they will allow overtime income earned for 12 months or more to offset debts of 6-24 months in duration, which can be a deal-saver is certain cases. Reference: h. Income from Overtime Work, Part Time Jobs, Second Jobs, and Bonuses […]

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FHA – Declining Overtime Income Calculation: What are the rules for averaging overtime income if that income shows a decline from the previous year?

Answer: If the Overtime or Bonus Income from the current year decreases by 20 percent or more from the previous year, you must use the current year’s income. Reference: v. Overtime and Bonus Income (TOTAL) (A) Definition: Overtime and Bonus Income refers to income that the Borrower receives in addition to the Borrower’s normal salary. (B) Standard: The Mortgagee may […]

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FHA – Overtime Income Calculation: How do I calculate overtime income when it was higher in 2016, lower in 2017, but higher YTD?

Answer: You will need to do 2 or 3 different calculations to figure out your qualifying income. Average the most recent 12 months of overtime income. Average the overtime income of the 12 months previous to that. If the most recent 12 month’s average is 20% (or more) lower that the average of the previous […]

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