After being unemployed for some time, my husband found a new job. He has been on this job for about 4 months. His pay varies from week to week because he is paid based on his deliveries. Some weeks are great and others are just OK. We want to purchase our first home to take advantage of the low rates, but had a lender say that we don’t qualify because of my husband’s income. He makes about what he used to make, how can this be?
In the lending world, we look at income differently than you would. If your husband had a job that paid hourly or a salaried position, your lender would have been able to move forward with your purchase.
Employees paid per load, per delivery, or commission must have a 2 year history with the same employer so that the lender can average their income. This makes sense when you think that commission employees’ income can fluctuate from week to week or month to month. It would be difficult for a lender to get a good handle on income with just a short history of 4 months. This is also true for self-employed borrowers. Lenders must see 2 years’ tax returns for these types of wage earners in order to determine income for loan purposes.
You will have to wait until you have two tax years with this employer before you can proceed with any type of residential mortgage.
Donna Holmer (NMLS #258561) is a Branch Manager & Senior Loan Officer with Diamond Residential Mortgage Corporation in Merrillville, Indiana. You can reach Donna by cell phone – 219.682.4208 or email questions to Donna.Holmer@TheDRMC.com. Evening appointments are available.