Adding Income to AZ Home Loan

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When applying for a home loan, Arizona loan officers often take a minimalist’s approach with your income.  In other words, they err on the side of caution using your most basic straight forward income.  While blood still does not flow from a stone, often more less obvious income is available if your loan officer looks for it.

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Increasing Your Income for a Home Loan

Minimalism is a “no harm/no foul” style when basic/easy income gets the loan approved.  However, what if you need more income to qualify you for a home loan?  Several scenarios exist where Arizona Mortgage Lenders can add income above and beyond what your income documents show.  For example:

  • Grossing up non taxable income
  • One time cost elimination
  • Depreciation add back
  • Business mileage add back
  • Income derived from an asset base

Grossing Up Non-Taxable Income

When a borrower receives non-taxable income (example – social security income) their mortgage officer can sometimes give credit for 125% of the gross social security income.   For example, when social security income is $1,000/month the borrower sometimes receives credit for $1,250 per month in social security income.

One Time Costs

Often, borrowers have various one-time costs on their tax returns.  Typically, these show up on on a borrower’s schedule E or schedule C. For example:

  • A borrower may have fixed up one of their rental homes after a major flood.  While this shows as an expense, underwriters will add it back to income.
  • Many businesses have start-up costs in the beginning of operation.  A self-employed borrower’s tax return may show such expenses in the business’s first year.  Underwriters will add one time expenses back to income.


Borrowers with depreciation as an expense for any of a variety of reasons can  have this added back into their income being used to qualify them.

Business Mileage

Borrower’s claiming business miles as an expense will be able to add income back some portion of that expense back to income on their loan file.   Learn more.

Income From Assets

Retired borrowers may be able to also get income credit based on the amount of money they have in retirement accounts.   In fact, this is true even if they have not been pulling funds from their retirement asset base at the time of loan application.

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In summary, seasoned loan officers may increase the income used to qualify a borrower when such income exists.  This helps borrowers qualify for a larger loan and/or helps improve what interest rate the borrower receives.

By Jeremy House

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