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A: Why use a Connecticut Mortgage Broker?
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3. Mortgage Process >>
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income they will only use your base rate times your regular scheduled hours up to 40 a week.
Commission:
If a partial amount, or all, of your income is determined by sales, then this is defined as commission income. To determine your usable commission income they will take a two year history (add both years total wages and divide by 12).
If commission income makes up 50% or more of your total wages the past two years tax returns is reviewed to determine if you take any business deductions against your total income. If so, this is deducted from your yearly total prior to calculating your average income. If you receive a draw that is required to be paid back, this will not be used in your monthly income.
Bonus:
Bonus income is typically paid monthly, quarterly or yearly. This type of income is typically based on either your performance, or the performance of the company you work for. Thus a two year history is required in order to use this income in your qualification (add both years total wages and divide by 12).
Self Employed:
This is defined by owning 25% or more of a business and/or filing a profit and loss statement on your personal federal returns. Here are different types of self employed income:
Sole Proprietor:
If you are a sole proprietor you typically only file personal returns with a profit and loss. A two year history is used to determine your income. This calculation is a little more involved then a W2 employee. As a basic rule of thumb, your businesses adjusted gross income is taken, depreciation is added back in, as well as any type of retirement withholdings.
Partnership:
A two year history is required, with a calculation is similar to a sole proprietor’s calculation, except it will require a copy of your K1 returns for the past two years.
Corporation:
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