Will Bonuses Qualify Me For a Larger Mortgage?
2 August 2004
“I am planning to relocate to a new job which has a much lower salary than my current one but a high bonus potential. Counting the bonus, I will be making more overall on my new job. Will I qualify for a larger mortgage?”
No, you will qualify for a smaller mortgage based only on your lower salary, until such time as you can demonstrate that the bonuses are a reliable source of income.
In qualifying borrowers, lenders are interested in the income that can safely be assumed will be available, not income that might or might not be available. So if you leave a job that pays less but has a large potential bonus, the income your lender will accept goes down.
If you hold the new position for some time and can demonstrate that the bonuses come in regularly, then the lender will accept them as part of your income. But the burden of proof is yours, you must convince the underwriter.
“I am planning to relocate to a new job which has a much lower salary than my current one but a high bonus potential. Counting the bonus, I will be making more overall on my new job. Will I qualify for a larger mortgage?”
No, you will qualify for a smaller mortgage based only on your lower salary, until such time as you can demonstrate that the bonuses are a reliable source of income.
In qualifying borrowers, lenders are interested in the income that can safely be assumed will be available, not income that might or might not be available. So if you leave a job that pays less but has a large potential bonus, the income your lender will accept goes down.
If you hold the new position for some time and can demonstrate that the bonuses come in regularly, then the lender will accept them as part of your income. But the burden of proof is yours, you must convince the underwriter.