Life doesn’t always go as planned—especially when it comes to big changes such as buying a house or switching jobs. For this reason, flexibility can be a game-changer when it comes to major life decisions.
Imagine you’re all set to move to a new city, but your new job won’t start for another month. How do you secure a mortgage in this situation?
This is where the concept of “future income” comes into play.
What is Future Income?
Future income lets you use anticipated earnings when applying for a mortgage loan.
If your new job involves relocating, you might prefer buying and settling into your new home “before” starting the position. But if you’re unable to qualify for a mortgage at this time, you might have to find temporary housing.
FirstBank Mortgage understands this predicament. Therefore, under certain circumstances, we’ll include income you’re expected to earn when reviewing your home loan application – allowing you to secure a mortgage before officially beginning your new job.
What are the Qualifications for Using Future Income?
Qualifying for future income when applying for a mortgage is not a one-size-fits-all process. Borrowers must meet specific requirements to be eligible.
Basic qualifications for using future income include:
• Fulfill all employment contingencies: Before your mortgage closes, you must successfully complete any employment contingencies such as background checks, state certifications or drug tests.
• Provide proof of job offer. Additionally, you’ll need to provide a job offer letter from your employer that specifies your start date, salary and employment terms. This letter must be signed by both parties (you and your future employer). You must begin employment within 90 days of the note date.
• Provide proof of sufficient cash reserves to cover each mortgage payment before your employment begins.
In addition, using future income for qualifying purchases involves meeting standard lending guidelines.
For example, you must meet the minimum credit and debt-to-income requirement of your mortgage program, and you’ll need to provide other supporting documentation (recent tax returns or W2s, bank statements and other financial records).
Why is Future Income So Appealing?
The bottom line is that this provision can make it easier to secure housing while navigating relocations or career changes.
Keep in mind, too, that future income isn’t limited to an entirely new job position. If you’re applying for a conventional mortgage, you can even use this benefit when accepting a promotion within the same company.
Using future income when applying for a mortgage offers flexibility, allowing you to leverage future earnings and enter the housing market. You’re able to settle into your new life, neighborhood and home with peace of mind – before starting your job.
The loan experts at FirstBank Mortgage are happy to discuss options with you and find the right lending solution for your next home. We’re happy to help anytime.