{"id":3541,"date":"2016-05-03T20:31:04","date_gmt":"2016-05-03T20:31:04","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=3541"},"modified":"2020-07-17T15:28:11","modified_gmt":"2020-07-17T15:28:11","slug":"commission-income","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/commission-income\/","title":{"rendered":"Buying a Home with Less Than 2 Years of Commission Income"},"content":{"rendered":"\r\n

\"Commission<\/figure><\/h1>\r\n\r\n\r\n\r\n

It happens all the time where someone builds up the nerves to venture from an hourly or salaried position into a partial or full commission income job. If the person is good at what they do, the income potential can be much higher than a salaried job. But, then you find out it is hard to buy a home with less than 2 years of commission income. Even homeowners looking to refinance with commissioned income have qualifying issues. <\/p>\r\n\r\n\r\n\r\n

Negatives About Commission Income and Mortgages<\/h2>\r\n\r\n\r\n\r\n

The first negative is an underlying potential issue that could rear its ugly head during the mortgage process. First, there are unreimbursed employee expenses<\/strong><\/span><\/a>on the tax returns. If there are URE’s, they must be subtracted from the borrower’s income (but only if 25% or more income is from commission income). This can sometimes be a significant portion of the borrower’s income which could cause major debt to income issues. Also commissions are averaged over a period of time. Using expected future, potential commissions cannot be used because sufficient history is required. So, brand new commission income cannot be counted for insufficient history. <\/p>\r\n\r\n\r\n\r\n

Less Than 2 Years of Commission Income?<\/h2>\r\n\r\n\r\n\r\n

Fortunately, we have a couple potential options for less than 2 years of commission experience. A lot of mortgage programs have the standard requirement of a 2 year history of receiving commission income. Otherwise, it cannot be counted at all. Once you do have the 2 year history, the commission portion of the income must be averaged over the 2 year period. <\/p>\r\n\r\n\r\n\r\n

For instance, if the commission income portion of the borrower’s pay is $84,000 over a 2 year period, then the monthly figured used would be $3500 per month. Although, if the borrower reports unreimbursed employee expenses<\/a><\/strong><\/span>, it will reduce the income.<\/p>\r\n\r\n\r\n\r\n

Example Calculation for 2 Years of Commission Income with Unreimbursed Expenses<\/h4>\r\n\r\n\r\n\r\n