Anyone know how a mortgage lender decides your gross income

[jlt19]

for DITI purposes?

Is it based on the last x amount of paychecks? Or based on your average so far this year? 

W2 probably won't work for us b/c I worked 2 jobs last year and was on unemployment for a few months due to Covid, plus I had a settlement, so our AGI was higher than normal.

I ask b/c we're both salaried, but DH has gotten OT hours the past 2 months with no real end in sight. Basing DITI off that puts us at 42% DITI (keeping our current house payment included b/c we're not doing contingency). But doing JUST salary, we're at 48%, and could affect our loan rate. 

Now, the big problem is b/c we have a personal loan that is $1772/month (3.49% for 36 months) that consolidated our two car loans and is intended to pay off my SL's as soon as they become due.  I obviously did that before even dreaming of buying a new house.  That loan DOES allow a recast, so I could get us below the 45% needed by paying off enough of it now to less our payments by about $325/month (haven't done the math yet). 

I mean, once we sell our house, we'll be paying that loan off, the SL off, and putting more towards the new house, but that all won't happen until AFTER this all goes through underwriting b/c we haven't even listed yet!

[awkwardpenguin]

The rules are complicated, but basically they probably won't count your H's overtime. Overtime is calculated similarly to bonuses, which is they use the lowest amount you can document in the past two years and add that to income. So unless he's been making a similar amount for several years, they are likely to use just regular salary.

You need a TOTAL DTI ratio of 43% or lower to get a qualified mortgage, and most lenders won't consider DTI above that. That includes all debt service - the current mortgage, the new mortgage, and the personal loan.