## Does My Bonus Count Towards Mortgage?
**Can I Use My Bonus to Get a Mortgage?**
Yes, in most cases, you can use your bonus towards a mortgage. Lenders typically consider bonuses as part of your income when evaluating your mortgage application. However, there are some important factors to keep in mind:
### How Lenders View Bonuses
Lenders typically view bonuses as either **recurring** or **non-recurring**.
* **Recurring bonuses:** Bonuses that you receive regularly, such as annual bonuses or quarterly incentives, are typically considered more favorably by lenders. They provide evidence of a stable income stream and increase your debt-to-income ratio (DTI).
* **Non-recurring bonuses:** Bonuses that you receive infrequently, such as one-time sign-up bonuses or performance-based bonuses, may be considered less favorably by lenders. They can provide a temporary boost to your income but may not be reliable over the long term.
### Documenting Your Bonus
To use your bonus towards a mortgage, you will need to provide documentation to the lender. This may include:
* **Your most recent pay stubs:** Pay stubs that show your bonus payments
* **A letter from your employer:** A letter from your employer verifying your bonus and its frequency
* **Bank statements:** Bank statements that show your bonus deposits
### Using Your Bonus for a Down Payment
You can use your bonus to make a larger down payment on your mortgage, which can have several benefits:
* **Lower monthly payments:** A larger down payment results in a smaller loan amount, which means lower monthly mortgage payments.
* **Reduced mortgage insurance:** If you are required to pay mortgage insurance (PMI), a larger down payment can reduce the amount of PMI you pay each month.
* **Increased equity:** A larger down payment gives you more equity in your home from the start.
### Using Your Bonus to Pay Closing Costs
You can also use your bonus to pay closing costs, which are the fees and expenses associated with getting a mortgage. This can be a helpful way to reduce the upfront costs of homeownership.
### Factors to Consider
While bonuses can be a valuable tool for getting a mortgage, there are some important factors to consider:
* **Your job stability:** Lenders want to see that you have a stable source of income, including your bonus. If you have a history of job hopping or if your bonus is based on performance, the lender may be less likely to consider it as part of your income.
* **Your other debts:** Your DTI is a key factor in determining your mortgage eligibility. If you have a high DTI, adding a bonus to your income may not significantly improve your chances of qualifying for a mortgage.
* **Lender guidelines:** Each lender has its own guidelines for considering bonuses. Be sure to ask your lender about their specific requirements before assuming that your bonus will be counted towards your mortgage.
## FAQs
**1. Can I use a bonus from my previous job towards a mortgage?**
It is unlikely that a lender will consider a bonus from your previous job unless you have a history of receiving bonuses in your new job.
**2. How long do I need to have been receiving a bonus before I can use it towards a mortgage?**
Most lenders prefer to see at least one to two years of consistent bonus payments before considering it as part of your income.
**3. Will a non-recurring bonus help me qualify for a mortgage?**
Non-recurring bonuses may be considered in some cases, but lenders will typically give more weight to recurring bonuses.
**4. Can I use my bonus to buy a home without a down payment?**
In most cases, you will still need to make a down payment to get a mortgage, even if you use your bonus.
**Conclusion**
Bonuses can be a valuable tool for getting a mortgage, but it is important to understand how lenders view them and how you can use them effectively. By carefully considering the factors discussed in this article, you can increase your chances of getting a mortgage with the best possible terms.