A Step-by-Step Guide to Demystifying Complex Income for Mortgage Approval

Buying a home is a big milestone, but for those who have complex income streams, it can feel confusing. If you’re one of the many borrowers with variable income or multiple sources of income, follow these steps to keep the process clear and calm.

Step 1: List your income sources

Your first goal of the mortgage process is to show that your income is steady and likely to continue growing. Since a mortgage is a long-term bill, your lender must be confident in your ability to make payments towards it.

This means writing down each way you get paid, including salary, commissions, bonuses, tips, contract work, rental income, and support payments.

Make sure to note how long you have received this payment, and where it shows up in your bank account.

Step 2: Gather documents for pre-approval

A pre-approval letter, resulting from an early review of your credit, income, assets, and debts, shows sellers you are serious about buying. This letter outlines your price range and estimated cash-to-close, while remaining conditional on the property, appraisal, and final underwriting.

The following documents help your lender verify your information and issue a strong pre-approval. Your WSFS Mortgage Loan Officer will outline what is needed and how to submit your documents securely through our system.

• Photo ID
• Recent pay information or deposit history
• Two years of tax returns if you run a business or freelance
• Bank statements for the last two months
• Leases for rental homes, if any
• Agreements and proof of receipt for support payments, as needed

The earlier on in the mortgage process you can share these documents with your lender, the better.

Step 3: Have a clear plan for rates

Mortgage options and rates can change while you shop, and even a small rate shift can adjust your monthly payment plan. By working with a WSFS Mortgage Associate, we can help you decide when to lock, whether to keep an option if rates drop, and which loan fits your timeline best.

• Choose a lock that fits your timeline: Ask if there is an option to reduce the rate down the road if the market drops.
• Match the loan to your plans: The type of loan you choose may be dependent on how long you anticipate being in your home. A fixed rate is steady for the long term, but an adjustable rate can start lower if you expect to move or refinance sooner.
• Consider paying discount points: This is a one-time cost that can lower your rate. Compare the cost with how long you expect to keep the loan.
• Compare closing costs: Ask about seller or lender credits to reduce your cash at closing.

Step 4: Understand fees in two buckets: Lender VS. Third Party

Lender fees include origination, processing, underwriting, and any discount points you choose to lower your rate. Third-party and government costs are paid to outside providers, like appraisal, title, recording fees, and transfer taxes.

With WSFS as your direct lender, you will not see a separate broker fee. Your Loan Officer will review your loan estimate line by line and explain points, credits, and your estimated cash-to-close.

Step 5: See if you qualify for assistance programs

Many buyers qualify for help they may not know about. Community lending options tied to the Community Reinvestment Act can offer flexible terms in certain areas or for qualifying income levels. Down payment assistance may show up in the form of a grant or a low-interest second loan to help with your down payment or closing costs.

At WSFS, our Grant Program provides up to $5,000 for eligible borrowers to use toward down payment or closing costs which can be combined with other WSFS, community, and government programs. It’s one of the many services we provide to make sure we make the mortgage process as smooth as possible for you.

Your WSFS Mortgage Loan Officer can help you review eligibility and how programs may work together for your situation.

Step 6: Stay mortgage-ready until closing

While you’re waiting to close, do your best to keep bank activity simple. Where possible, avoid new credit and big purchases including small loans for furniture, appliances, or other planned improvements. If something changes in your income or job, tell your Loan Officer right away. Clear communication prevents delays.

Step 7: Make your offer strong

Your pre-approval should help set a realistic price range. Know your monthly payment comfort zone, not just the maximum amount you qualify for. Before you sign, you’ll want to share your timeline and any program requirements with your realtor, so everyone is aligned.

The Bottom Line

Complex income does not have to equal a complex home buying process. With a clean file, a simple rate plan, and the right programs, you can move forward with confidence. If you’re ready to buy a home or want help mapping your plan, WSFS Mortgage Loan Officers are here to help you from start to finish, find out more by booking an appointment.