Mortgage Qualifying: Your Income, Job, and Debts: Workshop Replay!

Mortgage Qualifying: Your Income, Job, and Debts Workshop

How lenders determine what you qualify for—and how to prepare

One of the most common questions I hear from home buyers is:
“How do lenders decide how much I qualify for?”

In this workshop replay from my Home Buying Workshop Series, we break down the basics of mortgage qualifying—specifically how lenders review your income, employment, and monthly debts to determine what payment, loan amount, and home price may be realistic for you.

Understanding these basics early can help you avoid surprises, make better decisions, and feel more confident when you’re ready to buy.

Watch the Workshop Replay

This workshop is especially helpful if you:

• Are planning to buy your first home
• Have variable income, bonuses, or are self-employed
• Are considering changing jobs
• Want to understand how debts affect buying power
• Feel confused by pre-approval numbers

The Basics of Mortgage Qualifying

When lenders review a mortgage application, they’re really asking two simple questions:

1. Can you repay the loan?
2. Will you repay the loan?

This workshop focuses on the first question—your capacity, which is determined by your income, job stability, and monthly obligations.

What Counts as Income for a Mortgage?

Many types of income can be used for qualifying, as long as they are documented, consistent, and likely to continue.

Common examples include:

• Salary or hourly wages
• Bonus, commission, overtime (typically averaged over 2 years)
• Self-employed income (based on tax returns and/or alternative documentation)
• Retirement, disability, Social Security
• RSUs, trust income, interest income
• Child support or alimony (with sufficient continuance and consistency)

A general rule of thumb: if income is regular, predictable, and documented, it may be usable.

Employment History: Why Stability Matters

Lenders typically like to see two years of employment history, but that doesn’t always mean two years with the same employer.

Some situations that can still work:

• Job changes within the same field
• Career advancement
• Education related to your current job
• Returning to work after a documented gap

⚠️ Important: Making job changes during the mortgage process—especially switching to commission or self-employment—can delay or even derail approval. Always talk with your loan officer before making changes.

How Lenders Calculate Income

Different income types are treated differently:

• Salary: Annual salary ÷ 12
• Hourly / bonus / commission / overtime: Averaged over 24 months
• Self-employed: Typically a 2-year average of net income
• Second jobs / side gigs: Must usually be the same job for 2 years

One-time income (like a signing bonus) usually cannot be used for qualifying—but it may be used as funds for closing.

Understanding Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) compares your monthly debts to your gross monthly income.

There are two main ratios:

• Front-end ratio: Mortgage payment only
• Back-end ratio: Mortgage payment + all monthly debts

The back-end ratio is typically the most important.

While many programs allow DTIs up to about 45%, higher ratios may be possible in certain cases—but that doesn’t always mean they’re comfortable or sustainable.

How Debts Affect Buying Power

Monthly debts that are typically included:

• Car loans
• Credit cards (minimum payment)
• Student loans
• Child support / alimony
• Co-signed loans

Even a single new debt—like a car payment—can significantly reduce the home price you qualify for. In the workshop, I show how a $600 car payment can reduce buying power by $100,000 or more.

This is why it’s so important to talk with your lender before taking on new debt.

Special Scenarios We Cover

In the workshop, we also discuss:

• Self-employed borrowers and alternative documentation loans
• Letters of Explanation (LOEs) for job gaps or credit questions
• Verification of Employment (VOE) and why it happens more than once
• Buying with a co-signer or family member
• Buying with a friend (and why written agreements matter)
• Using roommate rent as qualifying income (when properly documented)

Every borrower’s situation is unique—and strategy matters.

Homework (Optional but Helpful)

If you want to apply what you learned:

1. Gather your income documents
2. Review your credit report and monthly debts
3. Estimate your own debt-to-income ratio

If you’d like help with this, I’m happy to walk through it with you.

Get the Workbook & Resources

Each workshop in this series includes companion materials to help you apply what you’re learning.

Request the Home Buyer Workshop resources here
(Select “Mortgage Qualifying: Your Income, Job and Debts”)

✔ Education-focused
✔ Delivered by email
✔ No pressure

What’s Next in the Series

Next up: From Pre-Qualified to Offer Accepted—what happens once you’re approved and how to position your offer in today’s market.

Missed previous recordings? Here is the Homebuyer Workshop Series.

You don’t have to wait for the next workshop to get started. If you have questions or want to talk through your personal scenario, feel free to reach out.