Income is a major factor for any mortgage loan you’re hoping to secure, and this process can be a bit more challenging for those who have variable or uneven forms of income. From gig economy workers to freelancers and others in similar positions, proving your income to a lender may require some different approaches than you’d be considering if you had a traditional salaried job.
At Altius Mortgage and our partners at Mortgage Ogden, we’re proud to offer a wide range of home loan options to clients in Provo and numerous other parts of Utah, including those perfect for first-time homebuyers — even those who don’t earn income in traditional ways. If you have a variable or uneven income but are still looking to obtain a mortgage, here are some basic tips we recommend following.
If a lender is going to accept your unusual form of income as robust, they will need significant documentation to back it up. They want to see steady months of earnings, and must be confident you can continue to pay your bills regardless of what kind of financial situation you may experience at any given time. As such, think about ways to prove consistency:
- Provide three years worth of bank statements showing a pattern of regular withdrawals
- If it applies to your situation, provide advanced notice of termination so your lender can account for any gap in income
- If you work a seasonal job or have another cyclical form of employment, try to provide six months worth of earnings from the time period when you’re working at full capacity
For seasonal or periodic workers, you should also prepare a detailed explanation of when your income is highest — how much you bring in, when during the year it occurs, and so on.
Improve Credit Score
One element that’s identical for variable income borrowers compared to traditional ones: A good credit score plays a crucial role in securing a mortgage. If you notice blemishes or potential setbacks on your credit report, working to remove them is essential.
If paying down debt seems like an impossibility for you right now, make sure you never miss any payments and communicate with your creditor(s) if there’s the possibility of late fees owed because of an income cycle. Ask your lender for advice on how to improve your credit score so you can get pre-approved before applying for a mortgage, or work with an experienced financial coach to tackle this issue head-on
Another element that’s similar to traditional borrowers: You’ll need to come up with a down payment that meets or exceeds the lender guidelines for your loan type. If you’re not sure what that number is, get in touch with us today and we can help you build an affordable repayment plan over time. But in many cases, planning for down payment savings will begin six months or even a year before you apply for the mortgage.
For more on how to go about obtaining a mortgage despite variable or uneven income, or to learn about any of our mortgage rates or home loan programs in Provo or other parts of Utah, speak to the team at Altius Mortgage today.