Auto Refinance Loan Income Percentage Requirement
Payment to income requirements
Overview
What are the most common income requirements to do a refinance? Income requirements will vary from lender to lender, but all lenders will need to establish that you have an income stream. Be it from retirement pension, steady job, investment income, and the like.
Generally speaking, we see that most banks require income to be at least is $2,000 per month (gross) for auto refinance applications. It doesn’t matter if you are part-time or full-time employed, just so as long as you meet the minimum threshold.
Below is a list of income sources that may be considered for the refinance application.
Job-related income
- Full-time
- Second job
- Part-time
- Bonuses and overtime pay
- Military income
- Self-employed with Form 1099
Supplemental sources of income
- Alimoney
- Palimoney
- Permanent disability
- Long-term disability
- Public assistance
Investments and other sources of income
- Rental income with lease verification
- Retirement income
- Pension payments
- Social security
- Dividends
- Annuities
Comments about job income
As it relates to your job, your salary needs to verifiable and you need to have worked at least 1-2 years at your current employer. If you haven’t work there for very long, then you’ll need to provide verifiable income at your previous employer.
Self-employed comments
If you are self-employed, then expect to provide additional documentation. In the past, some y banks were lenient with their diligence around verifying self-employed income. Many of these loans went belly-up. Later these thin-paper or “liar-loans” would be called out as a contributor to the sub-prime meltdown. Now banks will require copies of prior two years federal tax returns. Pages 1 and 2, and schedule "C" might be requested. When I was at HSBC, we used line 31 from Schedule "C" to determine average income/month
Note: many of the income sources listed above need not be disclosed if you comfortably meet the income requirement. Many applications ask for “other income”, which you can just leave blank. A good example is omitting alimony or palimony if you wish to not reveal it on the application. Thus, those income streams will not be considered in the income equation for your application.
