questions about income

[Anonymous]

How do loan officers determine what your income is when they go to approve you for a loan?  I know you usually need to provide 30 days worth of pay stubs and 2 years of w-2. 

Where I work we get our yearly raises in early December.  So our W-2's show what we made the year before, but that's no longer our salary.  For example, my W-2 from last year shows that I made about 39K, but at that point my yearly base salary was 42K and by the time I go to get approved, hopefully next year, I will be making over 50 K, due to a promotion and raise earlier this year and what should turn into 2 more raises before the end of this year. 

Lastly, how does it work when you get regularly paid more than your base salary.  I know that for overtime if you can get your employer to prove that it will continue for 2 more years it can get counted, but this isn't overtime.  It's shift differential.  I get paid 50-80 cents more an hour depending on what hours throughout the day that I work, nights, late night, and weekends.  This is shown on my paycheck and will continue as long as I stay in my current position, which is in the field, as oppossed to moving to a desk job.  Will this be like overtime, and will I have to get my employer to confirm this, or will the fact that it shows on all of my paystubs be enough?

Thank you!

[Anonymous]

You are right about the W2s and the recent pay stubs. But other than the CS, every lender may treat your income situation differently. Most important is that you have some history...because nobody can predict the future, only FICO can :-) Your last pay check will prove the height of your current income. Again, it depends on the lender.

Message Edited by Physicist on 08-26-2008 09:02 AM

[Anonymous]

Someone else will chime in I am sure who knows better, but...

They will go one of two ways more than likely and this is lender dependant.  Some want to average 2 years income and some use your most current month's base pay.  As far as the shift differential income, they will want to see 2 year history of it more than likely.  It is not as much about a letter saying it will be there, as proof that it has already been there for awhile (although the letter will help as well)  It may well depend upon the overall strength of the file anyways as DTI can be approved at a higher % for a strong credit profile, good down payment, and or solid history and reserves.

I would get the letter from your employer although this is not a guarantee they will count that income.  In the end I think it is a small point as you are talking less than 200 per month on a 4K per month income unless you are working some godawful overtime hours.  It may raise your purchase ceiling by 8K or so?  Of course that may be the difference you need so I would definitley try to get it counted.

Message Edited by mickie08 on 08-26-2008 02:50 PM

[DallasLoanGuy]

your rate of pay on the paystubs will be what we calculate income off of.

if shift differential is needed to qualify, there should be a way to get that income qualified with relative ease. <= as long as the employer cooperates.

[cfletch123]

My base salary is approx 65K. I work in maintenance 7 days per week and with overtime I gross at least 2200 a week. Will the mortgage company count my base or my gross with overtime.

[DallasLoanGuy]

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cfletch123 wrote:

My base salary is approx 65K. I work in maintenance 7 days per week and with overtime I gross at least 2200 a week. Will the mortgage company count my base or my gross with overtime.

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base + a 24 month average of overtime(if overtime has been for 2yrs).

some exceptions apply.