When applying for a mortgage in Michigan, one of the most important parts of the process is documenting stable, reliable income. While many borrowers qualify using W-2 wages or business income, some Michiganders rely on alternative income sources, especially retirees, investors, or self-employed individuals.
To keep things consistent and predictable, we require that certain types of income must be averaged over the most recent 24 months, no matter what. This guideline helps determine true long-term earning patterns rather than short-term spikes.
Income Types That Require a 24-Month Average
If you’re applying for a Michigan home loan and rely on any of the following income sources, we will calculate your qualifying income based on a two-year average:
- Dividend & Interest Income
Common for Michigan borrowers who hold investment portfolios, CDs, or interest-bearing savings.
- Capital Gains
Often seen with Michigan real estate investors or anyone who regularly buys and sells assets.
- Trust Income
Particularly relevant for borrowers who receive scheduled trust distributions.
- Foster Care Income
Michigan residents providing foster care can use this income, but it must be averaged to reflect long-term stability.
- Stock Options
This includes exercised stock options or employee stock programs, which can be irregular and therefore require averaging.
Many buyers use non-traditional income sources, especially investors and retirees. By averaging these income types, lenders ensure your Michigan mortgage is built on stable, predictable numbers, giving you better chances of approval and potentially better loan terms.
If you’re planning to buy or refinance a home in Michigan, reach out, we’ll guide you in the right direction.
