Mortgage  Question?
Can You Use Dividend Income to Qualify for a Mortgage?

Can you use dividend income to qualify for a mortgage?

Harry Jensen
By , Trusted Mortgage Expert with 45+ Years of Experience
Edited by Michael Jensen

If you earn regular dividends from an investment, asset or business you own you can use that income to qualify for a mortgage. The key to using dividends to get approved for a mortgage is to demonstrate a two year track record of receiving the income and to show that it is expected to continue in the future.

If you want to include dividend income in your loan application you are required to provide one of the following documents for the past two years: your brokerage or investment account statements or Schedule B from form 1040 of your personal tax returns -- Schedule B shows your dividend and interest income. If you cannot document your dividend income using one of these documents, you cannot use it to qualify for a mortgage.

Lenders average your dividend income over the prior two years according to your documents to calculate the monthly income for your application. For example, if you earned $75,000 in dividends last year and $65,000 the prior year, your two year total is $140,000. The lender divides this figure by 24 months to determine your average monthly dividend income, which is $5,835 in this example ($140,000 ÷ 24 months = $5,835).

Dividend income is usually relatively stable which is a positive for a mortgage. That said, fluctuations in your income can affect the figure lenders use.

Specifically, if your income declined in the most recent year, the lender typically uses this lower income figure instead of the two year average. If your income increased compared to the prior year, the lender still uses the two year average figure, which is the more conservative approach. If your dividend income is decreasing and has not flattened, the lender may exclude it from your application altogether.

Lenders also attempt to assess your future dividend income. They do this by reviewing your dividend-producing assets, which is why you are required to submit your most recent account statement.

If your assets depreciated in value recently, this can impact the amount of income lenders give you credit for. Please note that if you intend to sell a portion of your assets to pay for your down payment, closing costs and reserves, if applicable, this may also reduce the dividend income the lender uses.

Verifiable dividend income is added to any other income you earn from your job, other investments or retirement accounts to determine the mortgage you qualify for. For example, if you make $5,000 a month from your job, $1,000 in interest income and $2,000 in dividends, your total monthly income is $8,000.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the loan you can afford based on your monthly income and debt payments

The higher your monthly income, the higher the loan amount you can afford. This is why dividend income can be beneficial when you apply for a mortgage.

In closing, as long as you provide the required documentation, you can use dividend income to qualify for a mortgage. The higher and steadier the income, the better.

We recommend that you contact multiple lenders to review their underwriting requirements, especially the paperwork you need to submit with your loan application. Comparing loan proposals from several lenders also enables you to find the best mortgage terms.

Current Mortgage Rates in Ashburn, Virginia as of July 16, 2024
View All Lenders


Rate data provided by Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes, insurance premiums or private mortgage insurance if applicable. Actual payments will be greater with taxes and insurance included. Read through our lender table disclaimer for more information on rates and product details.


"B3-3.1-09, Other Sources of Income, Interest and Dividends Income." Selling Guide: Fannie Mae Single Family. Fannie Mae, October 2 2019. Web.

« Return to Q&A Home
About the author
Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

Harry Jensen LinkedInLinkedIn | Email Harry JensenEmail