Does My Bonus Help in the mortgage application?

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Does My Bonus Help


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Any source of income can help you get a mortgage. Bonuses can vary in their value to the lenders. Consistent, predictable bonuses definitely can improve your chances of getting a larger mortgage and a lower interest rate.

Bonuses come in two types. “Discretionary” bonuses are one-time payments given to employees as a reward for particular efforts. They are nice to receive, but you cannot expect to receive them at regular intervals; they are not planned bonuses. The best move is to put discretionary bonuses in the bank to increase your total assets.

The other type of bonus is a part of your total annual compensation. Many companies will offer a salary/bonus combination that that is based on performance but is at least partially guaranteed. These bonuses - at least the guaranteed part - can be counted as income. They boost your overall income, giving you a more favorable debt-to-income ratio.

Bonuses are great, but when you are applying for a mortgage, the lender wants to know what kind of bonus it is. Predictable bonuses can help you through the mortgage process.