Credit Card Center Advertiser Disclosure†
03-06-2012 09:55 PM
Can you typically count Stock Option Income as qualifying yearly income? I have stock option awards that vest 25%/year over a 4 year period. I have been with my company for over 10 years and have been awarded options every year. So every year in June I have 4 sets of options each vesting 25%. I have netted on average $20K per year each of the last three years from the sale of options. Based on unvested awards and todays stock price I will be able to net about $25K per year on average for the next 4 years. Will an underwriter allow me to use this income in my income calculation? If it helps the stock options income is included on the W2 and taxed as standard income, ie say base salary is $10K, bonus is $1K and sale of options net $10K line one on my W2 would say $21K.
I also receive yearly bonus and can document 7 plus years of receiving this bonus. Will this be included in income?
03-07-2012 06:29 AM
Yes, I have an almost identical employer stock grant program and my stock income was counted... it's definitely part of your annual income.
03-07-2012 09:16 AM
Yes, excluding bonuses.
03-07-2012 09:32 AM
My bonuses counted too... I receive semi-annual bonuses every year and while they do fluctuate some, I always get them. I believe my LO just averaged my bonuses from the last 2 years to determine what he would include in my annual income.
04-02-2012 12:20 PM
Does anyone else have experience with this, we are working with several lenders and just received an answer back from the 1st one NVR. They said they can not include stock option income as qualifying income. And can also only include 50% of the last 2 years average bonus income. Even though stock option and bonus income is included on the W2 as regular income this can not be used to qualify.
We provided documentation showing 6+ years of bonus income received, and a letter stating it is likely to continue. For stock option income we provided documentation showing 3+ years of stock option income received, and a letter stating we are likely to continue receiving stock options. We showed proof of a guaranteed 5 years of option income at an amount equal to the three average income reported in 2009 - 2011.
It is strange because the other two lenders "Cole Taylor Mortgage" and "Canandaigua National Bank" seemed to be fine with using option income as qualyfying income. I just called to ask the question and neither loan officer was concerned. We are waiting to hear back later this week or next on what underwriting has to say from both banks. Now I am freaking out.
04-02-2012 01:17 PM
Every bank/lender has its own underwriting criteria. It is individual to each lender.
It is perfectly plausable that two banks would allow the type of income you have and another would not allow it. Go with the lender that underwrites their own deals or with a mortgage banker that funds their own deals. That way you know when the approval comes through, it's a done deal because they already have addressed the income issue.
04-03-2012 04:21 PM
Any other info?
What specific further information are you looking for? It is correct that banks have different guidelines.
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.