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Established Contributor
Posts: 534
Registered: ‎01-23-2013
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Nontaxable Income Upconversion

My main source of income comes from the Veterans Administration (compensation) and is nontaxable. It is my understanding that nontaxable income is upconverted (sorry if that's the wrong terminology) +25% for DTI purposes.

Is this info correct? If so, is it more or less a given or do lenders choose if they want to calculate that way?

It would be a VA mortgage if that makes a difference.

Any information/input whatsoever would be appreciated. Thank you.
Established Contributor
Posts: 534
Registered: ‎01-23-2013
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Re: Nontaxable Income Upconversion

bump

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Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
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Re: Nontaxable Income Upconversion

"Grossed up" is the term you are looking for.

 

Most lenders will gross it up by 20-25%.  However some lenders will determine what your federal tax bracket would be and gross it up by that amount, i.e. if you are in a 15% tax bracket they'll only gross it up by 15%.

 

It's a good idea to shore that up with your loan officer when determining what you can qualify for.

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