Six other Source of Income that Can Qualify You for a Mortgage

other forms of income

Author: CS

Before you can qualify for a mortgage, most lenders require a thorough check of your finances, including your source of income. Having good credit might sometimes not be enough to qualify you for a mortgage, and sometimes, it takes more than just one source of income.

Now, suppose you’re going to be including other sources of income in your financial report to qualify for a mortgage. In that case, most lenders require that it be a source of income that has been well documented and preferably previously declared on your tax statement, or they discredit it. They also require that your total debts, including your new monthly mortgage payments, be less than 43% of your total income.

Here are six other sources of income that you might currently have that can be used to qualify for a mortgage;

  • Side Hustle Funds: If you have a side business or a side hustle like tutoring online or you take on freelancing jobs (Copywriting, Editing, Graphic Design, Virtual Assistant) that bring in a somewhat steady stream of income monthly, then you can document it properly and include it in your account statement. 

It can serve as a source of income to increase your overall income figure and put you in a better position for securing that mortgage. However, there would have to be documentation that proves that you have been receiving these payments for at least two years for it to qualify as a valid source of income.

  • Building Owner Income: If you own an apartment building or a small condo that you lease or rent out to boarders and tenants, you can include the rent paid to you monthly in your account statements as a source of income. You must also have declared this source of income on your yearly tax returns.

Most lenders study your returns to evaluate the stability of the rental income over the past couple of years and use this to ascertain the viability of the payment as a criterion to get a mortgage.

  • Alimony Payments: If you’ve been through a divorce and have been receiving alimony payments from your former partner for close to two years, then this can qualify as an extra source of income. However, the payments must be proven to come regularly and on time. 

This means that if you have a dead-beat partner that misses a couple of payments from time to time or if the payments would come to a close in a period of fewer than two years, then it could spell bad news for the viability of this source of income.

  • Pensions and Social Security Payments: “Age is nothing but a number” is a statement that can hold true for pensioners and retirees who still want to own a house after retirement. Most lenders do not deny applicants based on their ages as long as they have a good credit score and a debt ratio below the 43% mark.

The steady monthly pension and social security payments coupled with other income streams can easily qualify you for a mortgage.

  • Disability Income: Perhaps you had a work-related accident that has subserviently qualified you for a disability payment from your company that spans over a period of years. Then these payments can make you eligible for a mortgage. Most lenders require that you provide them with your disability policy and benefits statements to ascertain that you qualify for the disability payments.
  • Investments and Dividends income: The only parts of these investments that can be used to qualify for mortgages are interests and dividends. To use this income to be eligible for mortgages, you must be able to provide proof of ownership of the assets that produce these interests and documentation of the interests and dividends generated and paid to you in the last two years.

Qualifying for a mortgage can sometimes be a tricky process, but with a good credit score, debt-to-income ratio, and good sources of income, it would be a walk in the park. You can also document other sources of income such as military benefits and allowances, overtime pay, and commissions as a leg up to qualify for great mortgage deals. 

You might also like: