My husband and I, both 27, are planning to buy our first home soon. A year ago, our combined annual income was about $119k. However, after job changes in May and October, our income has increased to approximately $192k. We have no student loans and less than $1k per month in other debts. What should we expect regarding our pre-approval amount given this significant income increase?
If your income from these new jobs is salaried and consistent without a bonus structure, banks are likely to consider the full amount for pre-approval. Income variability, such as commissions or bonuses, usually requires a two-year history to be fully considered.
For salaried or fixed-hour jobs, your new income levels should be fully considered for the pre-approval. However, if your income includes variable components like overtime or bonuses, you’ll need at least a year’s history with these to be considered.
@Bennett
Thanks for clarifying! Yes, both our current and previous positions are salaried roles.
The full increase in your salary will likely be considered if it’s a fixed salary or hourly wage. For income components like commissions or bonuses, you’d need a longer history to use them in qualifying calculations.
It all hinges on the nature of your income. If it’s a stable salary or guaranteed hourly wage, that’s what will count. Jobs with variable income might require a longer history to qualify, depending on how your income is structured.
They typically look at your last four pay stubs and calculate an average.