Determining Capital Gain Income When Applying for a Home Loan
When you are applying for a home mortgage loan, one of the largest factors in qualifying is proof that you have a stable income. This typically done through a verification of employment where it is confirmed that you have been working for the same employer for the last two years, this is done so that a lender can confirm that you have steady income and will be able to make your monthly mortgage payments.
Since income from a capital gain is usually a one-time deal they are not typically considered when calculating a potential home buyer’s monthly income. However, according to Fannie Mae, there are a few situations when a borrower can use their capital gains to qualify for a mortgage. In order to be eligible there are a few requirements.
A borrower will need to be able to provide their federal income tax returns from the previous two years stating that capital gains have provided a steady income. An average income from the capital gains from the previous two years will need to be worked out. As long as a borrower has other assets that can be sold if extra income is required to make future payments, this income may be used. It is also important to note that capital losses do not have to be considered when calculating this income, even if the losses are repeated.
There are a variety of other income sources that mortgage lenders will consider when considering applicants for a home loan. Please feel free to reach out to United Home Loans for assistance with any of these questions.