When we are calculating income we have to evaluate three major things: is the income stable and reliable? Is it anticipated to continue in the foreseeable future? And is it an sufficient amount? Generally such income cannot be seen as stable and reliable if it has been received for less than 2 years. That being said, this same factor also takes into account for overtime and bonus income. When we are taking overtime and bonus into the calculation for the preapproval, per the VA handbook here is what we have to source:
- The income must be regular and predictable
- There must be a reasonable likelihood that it will continue in the future
- It must be compatible with the hours of duty and other work conditions of the borrowers primary position
- How long the borrower has been employed
If all of these sources line up correctly with overtime and bonus, the lender may use this income, if it is not eligible for inclusion in effective income, but is verified for at least 12 months, to offset debts of 10 to 24 months duration and include an explanation.