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tipped income on W-2

If I have claimed all of my tip income and it is accurately reflected on my W-2 so that when I file my taxes I do not have to file a form 4137 as I have in the past do I still have to use an average of 24 months to determine qualifying income for conventional 30 yr mortgage loan? Or will the standard recent paystubs, most recent W-2 and 1 yr tax return suffice for income documentation?
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August 16 2013 - US
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Answers (3)

It would help if we requested a written verification of employment where your employer could break down your pay (i.e. hourly wage, tips, etc).  This would give the underwriter a clearer picture of your two year income history.  
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August 19 2013
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I am a restaurant server and have been with the same company for nearly 4 years. Yes-we are hourly employees but a server's wage is only half of minimum wage--our tips are what we live on. I have nothing negative on my credit and a mid FICO score of around 740. Last year I my income was around $20K and this year will be around $28-29K. Last year I filed using a form 4137 in addition to my W-2 to report tips, this year it is being done through my employer and will be visible on my W-2. (I spent a portion of the previous year on another shift---big,big difference in sales! Which is why I made less.) Would I need a LOE to explain the difference and a letter from employer stating tips are expected to continue? And they would take an average of the 2 years? Maybe it was just wishful thinking on my part that since my paystubs, W-2 and tax return would all match that my qualifying income would not be lowered by averaging the 24 month period....
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August 18 2013
Due to the variability of this income source, they are going to want to see a two year history and average that income over the two year period.  Are you also receiving an hourly or salaried wage on top of your tip income?  If so, we can use this as a base and then add your tip income to the base to help you qualify.  If you have any additional questions, please do not hesitate contacting my email, or phone.  Thanks!


~ Jim, Residential Finance
[Phone removed by Zillow moderator.]
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August 17 2013
 
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