Question:

How is the income qualification for mortgage determined and what is it used for?

Answer:

If you are buying a house with a home loan, you have to satisfy the basic income qualification for mortgage requirement. That is to say, your application will be underwritten to ensure you will be able to afford the loan obligations and other expenses.

The borrower's income for the last two years will have to be verified, such as main employment, tax returns, rentals, part-time jobs, etc. The report of the three credit bureaus will expose all of the applicant's debts, credit lines, auto loans or leases, child alimony and others. Some lenders may require that the borrower settles some current obligations prior to extending the new loan money.

The income qualification for mortgage helps the borrower decide on the right loan: whether he needs a fixed rate mortgage for stability and safety, or will be able to exploit the flexibility offered by an adjustable rate mortgage.

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