Income Documents

  • Continuancy: Income and employment likely to continue for three-plus years.

  • Wage earners:

    • Most recent paystubs covering a 30-day period.

    • Most recent two years’ W-2s.

  • Self-employed:

    • Most recent two years’ federal returns with all schedules.

    • Most recent two years’ federal Corporate and/or Partnership returns (if applicable).

    • If paystubs and W-2s are issued, most recent paystubs and two years’ W-2s

    • If more than six months into fiscal year, signed P&L.

  • IRS Tax Transcripts: Required only when tax returns are required.

  • Alimony/Child Support:

    • Copy of divorce decree, separation agreement, or other legal decree outlining terms.

    • Three years’ continuance.

    • Most recent six months’ cancelled checks/bank statements receipt.

  • Removing debts paid by others/business: Six months’ cancelled checks/bank statements, (Underwriter discretion to allow).

  • Commission income • A minimum history of 2 years of commission income is recommended; however, commission income that has been received for 12 to 24 months may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income history.

  • Down Payment, Gifts, and Contributions:

    • Purchase Transactions:

      • The borrower must have 10% of own funds into the transaction.

      • Gift funds are permitted for all eligible occupancy types.

      • A signed gift letter and verification of donor’s ability to donate are required.

      • Max 3% interested party contributions.

    • Refinance Transactions:

      • A signed gift letter and verification of donor’s ability to donate are required.

      • Rate and term refinances only.

  • Gift of Equity: is allowed, can be used to satisfy 10% minimum borrower contribution.

  • Asset Depletion:

    • Asset depletion permitted on net documented assets. Monthly income calculation is net documented assets based on percentage allowed divided by 120 months.

    • Allowable Assets: Checking, Savings, Money Market, Certificat of Deposit, Stocks, Bonds, Mutual Funds, Retirement Accounts.

    • Ineligible Assets and Account Types: Stock options, Foreign funds, Health Savings Accounts, Assets title in an irrevocable trust, 529 accounts, Cash value/surrender value of life insurance, Privately held stock, Deferred compensation, Non-regulated financial companies, Cash-out refinance proceeds, Custodial accounts, Accounts pledged as collateral on another loan, Annuities, Non-vested restricted stock units, Non-liquid assets (automobiles, artwork, business, net worth, etc.), Non-financial assets (collectibles, stamps, coins, artwork, etc.) unless liquidated and placed into an eligible account, Escrow accounts, Below investment grade corporate and municipal bonds, Business funds, Self-directed IRA.