Most of my income comes from tips. Will they count my tips when I apply for a home loan?
Fannie Mae, Freddie Mac, FHA and VA will all count tip income as long as you have reported it on your tax returns of the past two years. Like any other income it will be averaged over the past two years or twelve months if you made less in the most recent year.
Unlike other income, you may not have to document your year to date tip income. Many people who receive tips paychecks do not show their year to date tips. This is acceptable as long as you have claimed the tips on your tax returns for the past two years.
The obvious problem is that many people don’t claim their tip income. And when they go to apply for a mortgage, there is no way to document this income. They end up forfeiting a large part of their income as far as loan qualification.
Do you have questions on qualifying for a home loan? Call Franklin Advantage at (800) 314-5626, one of our seasoned, professional Loan officers will be happy to help you through the home buying process.