About Your Credit and Income
On Q’s mortgage professionals are well trained to identify your individual strengths and match you with home loan programs that best fit your situation. Important factors in qualifying for a home loan are your credit, your income, and the Loan To Value (LTV) ratio you desire for your loan. Other factors, such as liquid assets, can also be important in getting your mortgage approved.
The FICO® credit score is a number based on a formula developed by Fair Isaac and Company, Inc. The FICO® score is an important measure that helps lenders gauge how likely you are to repay your debts. To make the most of your credit, pay bills consistently and on time, manage credit wisely, and check personal credit scores periodically.
The credit score formula takes many factors into consideration such as timeliness in paying bills, the amount of credit you have, how long you have had that credit, and the percentage of your total credit in use. These factors are weighed for importance and scored, and when calculated together they determine your FICO® credit score.
FICO® scores range from 300 to 850 and are kept by three primary credit bureaus (Transunion, Experian and Equifax). The higher your FICO® score (lenders normally look at the middle score as the representative score), the more rate and approval options you may have to choose from. Of course your FICO® score is just a number and isn’t the only credit data that is taken into account. During your mortgage application process you will have an opportunity to discuss the merits of your credit report with your On Q Mortgage Consultant and gain an explanation of the credit reporting provided on your credit report.
While maintaining a good credit score is important, On Q can provide valuable help to borrowers with less than perfect credit. Having good credit is important but less than perfect credit will not prevent you from getting a home loan in many cases.
Lower scores generally mean fewer financing options whether purchasing a new home or refinancing. At On Q we are experts at finding mortgage solutions to fit virtually every need. In this case, the On Q Team will work to make sure that all factors that make up your credit-worthiness are taken into account while helping you qualify for a loan.
To find out more about credit scores and how to maintain or improve your credit you may want to reference sites such as:
- Fannie Mae: www.fanniemae.com
- Freddie Mac: www.freddiemac.com
For more about credit scores and other useful information, or to order your personal credit report, visit:
- Equifax: www.equifax.com
Or you may order your credit report by calling: 800-685-1111. - Experian: www.experian.com
Or you may order your credit report by calling: 888-397-3742. - Transunion: www.transunion.com
Or you may order your credit report by calling: 800-888-4213.
Eligible Sources of Income
The following are several typical and acceptable sources for the income that must be demonstrated and verified to qualify for a home loan.
- Salary or Hourly Wage Income
- Commission and Bonus Income
- Second Job or Part-time Employment
- Spousal or Child Support
- Retirement, Pension or Social Security Income
- Annuities, Interest or Dividends Income
- Rental Income
- Self Employed Income
Documentation Requirements
Salary or Hourly Wage Income
Current pay-stubs covering the most recent 30 day period and two years of W2’s are necessary to document your income. Overtime may be used in some cases. Your On Q Mortgage Consultant will be able to help you determine if overtime pay is applicable for your situation.
Commission or Bonus Income
In some cases commissions and bonuses can be counted and used for income qualifying purposes. A consistent track record of receiving commissions and bonus income, and proof that it will continue, are essential in using it to qualify for your loan. Your On Q Mortgage Consultant will be able to determine what, if any, commission and bonus income can be included in your qualifying income.
Second Job or Part-time Employment
Current pay-stubs covering the most recent 30 day period and two years of W2’s are necessary to document this type of income. You must have a history of working a second job for at least two years prior to making your mortgage application
Spousal or Child Support
A court recorded settlement agreement will be necessary to verify that the support will continue for at least three additional years, and you will need proof of receiving the support for 12 months prior. Canceled checks or bank statements are a good way to document spousal or child support income.
Retirement / Pension / Social Security
A 1099R or annual statement, and proof of two months current receipt are necessary to document this type of income. Account statements are necessary to document your income.
Annuities
A 1099R or annual statement, and proof of two months current receipt are necessary to document this type of income. You also must document that you have sufficient funds to support the same level of income for at least three more years.
Interest / Dividends
Two years of complete 1040′s, including Schedule A and statements showing enough asset ownership to have interest/dividend income continue for at least an additional three years is necessary to document Interest and Dividend Income.
Rental Income
Two years of complete 1040′s, including Schedule E, are necessary to document rental income.
Self Employed
Two years of complete 1040′s are required to document self employment income. Business tax returns and/or accountant prepared profit and loss statements may also be required. Self Employment income documentation requirements will vary depending on the business structure and loan program.
Note Income
To verify Note Income, a copy of the note, verification of receipt of payments for the past 12 months and proof that income will continue for at least three more years is necessary.
