Bonus Income
Bonus income requires a _____ year history
What is 2 year history?
Any pay that isn't set or guaranteed
Variable Pay
Ex:Self Employment, commission, overtime, bonus
Borrower makes 500 bonus for the past 2 years, what is the what is the average monthly qualifying income
500.00
What happens if the most recent year is less than the prior year?
We have to use the lower of the two. if the increase is greater than 10% we need LOX from employer.
What color ends in urple
purple
these two items are required to calculate bonus income
VOE & End of year paystub
With a few exceptions nearly all times of variable pay require this time frame
2 consecutive yrs
borrower receives 20K in commission income for 2019 and 32K in commission for 2020 - what is the monthly commission income we can use?
20k+32k=52K/24= 2166.66 a month
If there are multiple variable pay income - it should be calculated this way
Individually
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True or False - income should only be on the conservative and worst case scenario
True
As long as pay is consistent/increasing, what history do you need?
you should be taking 24th month average
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If borrower has switched jobs, can we still use variable pay?
Yes, but we need the borrower to be with the employer long enough to show income is consistent with previous earnings.
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This party addresses why the income has declined greater than 10%. Also to provide an assurance to continue
Employer
That letter will then be evaluated to determine if we can use it or not.
What do we mean when we say "worst case scenario"
that means the pay is lower (on average) in the current year than the previous year and we use the lower of the two - the most conservative approach
ex 2020 borrower made 50K and 2019 borrower made 46K - we would use 2019 to qualify
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Are you able to count bonus without a consecutive 24 month history?
yes, Christmas bonus for example
Daily Double
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