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 [...]

2019-07-24T10:42:44-05:00July 25th, 2019|

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 [...]

2019-06-19T11:05:08-05:00June 25th, 2019|

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 [...]

2019-05-23T15:07:57-05:00May 24th, 2019|

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 [...]

2019-04-19T16:37:20-05:00April 24th, 2019|