What Counts as Income for a Mortgage?

What counts as income for a mortgage

So you are ready to become a homeowner; the first step is finding a home you love. The second step will be to look for a mortgage loan when you find your dream house. Next, your mortgage lender will scrutinize your earnings to ensure that you can afford the monthly payments associated with your new property and mortgage loan. Now, what is the next step? The next thing you have to do is find out what counts as income for a mortgage.

There are different sources of income that qualify for a mortgage, but not all money is equal. Although everything ends up in your bank account as cash, some forms of payment are more reliable than others in terms of consistency and ease of verification. Here are some of the most popular types of income that qualify for a mortgage.

Some Examples of Income for a mortgage

1. Salary

For the vast majority of people, their paycheck is their primary or exclusive source of income. As a result, your application may be simple. The longer you have been at your current employment, the better it will appear to the lender, and the more you will be able to borrow because you are a safer bet. Be careful to factor in overtime and bonus pay when determining your current income.

This one comes first in our list of incomes that count in a mortgage. If you want any extra money from your employment to count, you will have to establish that it is something you regularly get rather than as a one-time bonus. As a result, you will most likely need to submit many payslips to support your claim.

2. Earnings from Self-Employment or Freelancing

If you have two years’ worth of tax returns, lenders will look kindly on you; however, if you only have a year’s worth of self-employed income, you will have to jump through extra hoops to prove how much money you are producing. Lenders want to see that you have the income and repay the debt you are taking on. You may need to go to an alternate lender or buy through a program established exclusively for self-employed borrowers if you fulfill the requirements.

3. Income From the Military

Soldiers and their families are subject to the exact documentation requirements. Housing and food allowances can be included in income for mortgage calculations, which benefit our military members. Because income made in these areas is not taxed, those sent to combat zones must present certified proof.

4. Boarder Earnings

This is another thing that counts as income for a mortgage. Like Fannie Mae’s Home Ready, only a few specialist loans use border rents as income for mortgage reasons. There is an exception. That is when you have a disability, and your assistant lives with you and pays you (or possibly Medicare Waiver funds) for his housing. Even so, you can only deduct 30% of your rent as income.

5. Pensions and Social Security

Lenders might refuse borrowers based on their age. On the other hand, suppose your monthly income comprises a combination of Social Security or pension payments and other sources. In that case, you have a good chance as anybody of qualifying for a home loan, given your credit score and other factors are in excellent shape. This is a great item that counts as income for a mortgage.

6. Rental Income

Having two years of rental history with the suite will help the lenders determine how much income to contribute. If this is not possible for any reason, you might obtain an assessment to determine the unit’s market rent.

It is worth noting that CMHC will add and consider 100% of your rental income when evaluating your mortgage applications; however, most lenders will not.


Keep in mind that lenders have a legal obligation to make sure your loan is reasonable. Therefore, they will have to double-check everything. As a result, start gathering your papers as soon as possible. We have tried covering all the incomes and hopefully have answered the question, “What counts as income for a mortgage?”, but if you are still confused, we suggest you take help from your lender.

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