Thursday, April 7, 2011

Bonus Income and how its qualified

For many, especially in NYC, bonus income constitutes a nice chunk of a borrower's income.  In some cases, it is the majority of total compensation.  Generally, here is how the banks look at it:

You MUST have a 2 year history of bonus at the same firm
If the bonus was higher in the more recent year, then the bank takes a 2 year average
If the bonus was lower in the more recent year, they use the lower number.
Some of the portfolio lenders that do higher loan amounts may take a percentage of the total bonus

Note that Condo and Co op boards may view this income differently than the bank.

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