Supplemental income earned by a borrower, often through a second job, plays a significant role in mortgage lending. For institutions like Fannie Mae, this additional income stream can strengthen a borrower’s financial profile, enhancing their ability to qualify for a home loan. For instance, income from a part-time job or freelance work could be considered. Proper documentation of this income, such as pay stubs or tax returns, is essential for lenders to verify its stability and reliability.
Considering supplemental income provides a more holistic view of a borrower’s financial health and repayment capacity. This can lead to increased access to homeownership for individuals who might otherwise be excluded. Historically, evaluating only primary income sources may have overlooked a substantial segment of the population. The inclusion of supplemental income in underwriting guidelines reflects an evolving understanding of modern work arrangements and income diversification. This inclusivity can be especially beneficial for individuals in the gig economy or those with multiple income streams.
