Income & Employment

Different types of income: how they are calculated and verified for your mortgage.

Resources > Mortgage Manual > Income & Employment > Primary Employment Income: Base Salary

Primary employment income verification is a standard part of the pre-approval, application, underwriting, and final approval process. Income and employment history are required for almost all loan programs in order for a borrower to show their ability to repay their mortgage now and in the future. This article will focus solely on the use of base salary income. Check out the other articles in this section, if you are planning on using another form of income.

The documents required and the overall review process vary by loan program and lender. At Morty, we offer Conventional Agency Mortgages (mortgages backed by Fannie Mae & Freddie Mac), which have a standardized set of requirements that need to be met during the underwriting process in order for a lender to approve you for a mortgage. This is consistent across all lenders offering Conventional Programs and there is no wiggle room but we do our best to make it as easy as possible for you! 

“Examples of less predictable income sources include commissions, bonuses, substantial amounts of overtime pay, or employment that is subject to time limits, such as contract employees or tradesmen.” ⇒ See Variable Income.

General Guidelines for Income Documentation

  • Please upload documents that are computer-generated, typed by your employer(s), or in PDF format.
  • Make sure that your documents clearly identify your employer’s name and source of information.
  • Documents must clearly identify you, or your co-borrower, as the employee.
  • All information on the documents must be complete and legible.
  • Before uploading, please confirm that the original source of your document is from a third party, such as your human resources department, personnel office, payroll department, company’s payroll vendor, or supervisor.

What do we need?

  • Paystubs
    • Your most recent pay stub from the past 30 days from all employers and for you and your co-borrower, if applicable.
    • If you are closing in more than 60 days from when you apply we will need updated paystubs prior to closing. We will remind you of this closer to your closing date!
  • Employer W-2s
    • The last 2 years of W-2s for all jobs held within this time frame for all applicants. Please note that we will need these from both you and your co-borrower, if applicable.
      • Please upload the most recent two W-2s that you have received and used for your taxes.
      • Your W-2s should clearly state the years on them so that the underwriting team can verify that these documents are from your current or most recent employer(s).
  • Written Verification of Employment (WVOE) – Form 1005
    • This form is completed by your current employer, typically a manager or the HR department, to confirm the length of employment and current earnings. This is typically only needed for a salaried position if you have received a raise in the past or current year.
    • This is more commonly required if you receive variable income, some common variable income types include commission, bonus, and hourly wages.

Where can I find it?

  • Paystubs
    • You can usually find a digital version of your pay on your company’s online benefits portal or a physical copy mailed to your home.
    • If you only have paper copies, please scan and upload the whole document. If you only have access to a camera, please make sure the image is clear and all words are legible.
  • IRS W-2s
    • You can get your W-2 from your current and/or past employers. W-2s should be electronically available or mailed to you at the beginning of each year.
    • Although this is rare, if your employer cannot get you your W-2s in a timely manner, you can get them from the IRS at this site. You can also use this site if you lost your W-2s and do not have access to any copies.
  • Written Verification of Employment (WVOE)
    • If needed, someone from your Morty team will send you a form to review and E-sign to allow us to complete the WVOE directly with your employer.
    • Your billing or HR department is the best source for this, so we will need up-to-date contact information. If you do not have this contact information, we can also work with your manager as a backup. 

Why do we need this?

  • All mortgage programs require the calculation of what is known as your Debt-to-Income ratio for qualification. We and the lender use your income information to confirm that you qualify for the loan that you have applied for.
  • Lenders are legally required to verify that you are paid the same income that you stated on your application. Lenders universally verify borrowers’ income by using documentation recognized by the IRS as official income documentation.
  • Lenders require your W-2s to verify your history of income and employment and pay stubs to verify that your income has remained stable and is expected to continue. 
  • WVOE’s are typically required as a supplement in the event that you have seen a change in your income since your most recent year-end W-2. This often occurs if you have recently received a raise or changed job positions during the current calendar year. 

Common Issues

  • We frequently see pay stubs that are not from within a recent enough time frame for a lender to be able to verify your current and ongoing income. Pay stubs should be dated at least within 30 days of your application date, although the most recent pay stub is highly recommended to save you from having to provide additional pay stubs later in the process.
  • Some borrowers have a hard time accessing their W-2s or have lost their hard copies but don’t worry, you can always get another copy from your employer or find copies on the IRS website.
  • It’s very important to use digital copies of W-2s and pay stubs when possible. Lenders will request new versions of images or scans of these documents if they are blurry or do not capture the entire document.
  • Borrowers providing tax returns in place of the W-2.
  • Income documents that are password protected cannot be reviewed by us or the lender’s underwriter. Our secure portal should do the trick! 
  • Year-to-date pay stub earnings that do not match annual earnings as documented on the most recent W-2. This is typically when we need to add the WVOE into the verification process. 

External Resources

  1. Fannie Mae Selling Guide – General Income
  2. Fannie Mae Selling Guide – Standards for Employment Documentation

📁W-2 Example

📁Paystub Example