Question - Commission Salary + Loan

[DaddyTorgo]

Here's a question I googled and didn't find an answer and I'm wondering: If you work at a commission-based job (which for some intents and purposes you could say I do), how do you report your monthly-income for purposes of getting a loan? My "commissions" are paid quarterly...so should I just split them into 3 (but then it won't match my actual bank account records), or do I just have to sit there and explain it, or what?

I know somebody's dealt with this before somewhere, but I can't find an answer on Google...

edit: if nobody has an answer it's cool - i'll just stop into the bank tomorrow and ask them, but i'd rather figure it out without that i suppose

[dacman]

IIRC, a 6-12 month average per month is typical.

[DaddyTorgo]

i'm confused dac - what do you mean by that?

[stevew]

add up your commissions for 12 month period. Then divide by 12 to tabulate a monthy figure.

[DaddyTorgo]

aaaah gotcha. that's what i assumed he meant, but i wanted to be sure...lol

[cubboyroy1826]

Typically if you are going to use commission as part of your qualifying income you will need to prove a two year track record of the commission. Most lenders will require a written verification fo employment from your employer to break out your income for the last two years so they can confirm how much you have received in commission. The commission will be averaged over the last two years.

[DaddyTorgo]

yeah - and that's going to be my problem - that my commission income isn't going to kick in until January. And that's the same time that my salary is going to be bumped up to something that is like...not going to scare off lenders. So I also won't have a track-record of that extending back.

might end up being more difficult than i thought - might have to sit down with the local loan folks and try to see what can be done. my situation is a little different maybe since i'm not actually paid on commission, it's more like i have a 10% stake in the company and we essentially get paid a finder's fee spread quarterly over 5 years (easiest way to explain it is just to say "commission" though).

[cubboyroy1826]

Yeah that could be a bit to explain. Fee free to PM with questions we unfortunately are not licensed in MA.

[DaddyTorgo]

i'll probably take you up on that cubby. i think i'll have to go in and sit down with loan officers and explain the business model and show our contracts with our clients and our books probably.