How do lenders calculate DTI?

Generally, all lenders calculate DTI the same way as directed under the loan program selected, but there are some differences between the requirement for the type of loan. Fannie Mae and Freddie Mac are similar in many ways but many times the income calculation is different. When it comes to variable income their rules are usually the same. Variable income would be Overtime, Bonus, Commissions. You are asking about bonus income. W2s do not breakdown income type. The underwriter will use the last paystub of each your and use the YTD calculation for the bonus category. They take the year end YTD Bonus figure for the last two years (2020 & 2021) plus any Bonus income showing on the current paystub. Add them together and divide them by the number of months (12 for 2020, 12 for 2021 and if the paystub were dated February 28, 2 for 2022). The fact that the bonuses were paid throughout the year, it is unlikely that it would hurt you.Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Certified Mortgage Advisor and Certified by The National Association of Mortgage Professionals as a Certified Veterans Lending Specialist.NEXA is licensed in all states except MA and NY so give us a call. ~ www.ApplyYes.com 480-889-9000 - OR - 480-695-9300.

Short answer for bonus income is that the bonus income has been consistent for a min of 2 yrs. It would then be averaged. Good luck!!