What is the approval process for a mortgage loan when you have recently taken on a commission only position?

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  1. Reply
    May 19, 2011 at 8:26 am

    It won’t be easy. ‘Commission only’ is considered the same as being self-employed. Lenders will want a two year track record of your income levels doing this before you will be considered for a mortgage.

  2. Reply
    May 19, 2011 at 9:14 am

    I think two years is a high estimate.

    In general, even with the current economic recession, it is easier to get a housing loan that a car loan provided you can provide proof of income.

    What you want to take to your bank/credit union/other loan providers (because you should shop around for the best rates, unless you belong to a credit union which will almost certainly have the best rates) is:

    A description of your job, if you can get something from your boss or the company HR or payroll, something that says you make X an hour/day for base pay, even if it’s a tiny amount. If you get literally nothing more than commission try to have something that lists a projected income. This will not get you a loan by itself but may get you a loan a little sooner or for a little more money.

    This is the critical part – income tax returns and bank statements. Save your monthly statements from the bank, which will show your deposits every pay period. This will allow the lender to average out your earnings so they can have a good idea of what you make, and therefore, what they are willing to risk lending you. When I applied for a car loan some time ago, as an independent contractor and a young’un with absolutely no credit, I was told with three months of proof on income in the form of bank statements they would definitely be able to set up a loan for me, and that with two months, as long as it were consistent, they could most likely set one up. Granted that was for a smaller loan but since the basic principle is the same six months of proof should be more than adequate.

    And, of course, the higher your credit score, and the less your name appears in debt collection agencies’ databases, the less other criteria (but not by much) you will have to fulfill to get your loan, which means quicker results (and of course better terms,etc.) for you!

    Good luck, and sell sell sell!

    There’s a sucker born every minute
    -P.T. Barnum

    Also, if you are a first-time buyer, check if your state has a first time buyer program with special low interest rates and lower down payments, not to mention easier loan terms and approval conditions. Some, like Florida’s, require also that you take a brief homeowner/real estate class, but after that and a down payment of $ 3-5,000, young couples or even singles can get very low interest loans for I believe up to $ 150,000-ish. Other states have similar programs with minor differences.

  3. Reply
    May 19, 2011 at 9:37 am

    Shop around. You should not have a problem.

    The point is you have to have the income to “qualify” so your question to a “mortgage broker” is “how much can i buy?”

    they will do the “income” and give you and answer.

    Then you can ask “why?”.
    Also your “credit record” is important.
    I just did one and was amazed at how tight the “credit record” is now (think it is all the foreclosures).

    good luck

  4. Reply
    May 19, 2011 at 9:37 am

    The process is the same, you have to document the income for the past two years. Keep in mind, that each lender is a business on it’s own and has it’s own business practices and policies. So to be sure how a lender will look at your income, you need to talk with them directly.

  5. Reply
    Ed Atun
    May 19, 2011 at 9:50 am

    They check that you have good credit, good employment, good track record of saving money. Then you get a loan. Good employment can be a commission job. YOu just have to prove it to them. /

  6. Reply
    Dale H
    May 19, 2011 at 10:42 am

    Sorry, but you will probably not be able to qualify as most programs today require full income verification and because you do not have a 2 year history in a “commission position” chances are you will not meet the guidelines with regard to the stability test for income. Even stated income programs (if they are still available in your area) would require 2 years employment history with the same employer typically.

    You are probably SOL for now.

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