Will Mortgage Lenders Count Anticipated Income?

April 5, 1999 "My husband and I are physicians in our last year of residency (to be completed in 6/99) and are looking to purchase a multi-family unit building. We will probably be applying for a loan in 4/99. Will we be able to borrow more based on the fact that our income will triple 2 months after applying?" There is no explicit provision in the underwriting rules for taking account of anticipated growth in income. Lenders are concerned with the income you have had that you can document, and they look for evidence that this income will continue, but they are not going to base a loan on anticipated income that may or may not materialize. But, you don't actually have to be earning the income currently if you can document that you will be earning it because the position has been pledged to you. You need to finalize the deals that will triple your income before you apply. You will have to provide documentary evidence satisfactory to the lender that it is a done deal. Copyright Jack Guttentag 2002

Jack Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. Visit the Mortgage Professor's web site for more answers to commonly asked questions.

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