Stupid question - how to buy given income split
This is a dumb question I am sure, but bear with me.
I'm 5 years into my career and at some point (probably in another 5 years) would like to buy a nice place. Not looking to do anything soon.
The down payment - even in NYC with 20% down - won't be an issue. But how do lenders deal with the 1) volatility in income and 2) split between base and bonus?
If this were IBD/PE , I feel like you could show that your bonus is fairly guaranteed or consistent in size. But with HF it's .. well, we all know it's not that.
Not looking for financial advice obviously just curious what others have heard or done themselves.
Is the point just that you need to buy almost or entirely in cash?
My mortgage guy only counts base and assets.
I think what will happen in your case is that they will haircut bonus by some percentage.
But honestly, these mortgage brokers are looking to lend so if you have three years of rather consistent base and bonus they won’t care, they get paid to book the mortgage and worry about it blowing up is someone else’s problem years down the line.
Sizable post close liquid assets relative to mortgage amount
a lot will look at last three years, average those and then haircut that.
Honestly assets help but much less than you think.
If you're borrowing $100, mortgage brokers have decided having income of 25 is way more important than after tax assets of 500.
Don’t ask me why.
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