Public assistance income, such as Temporary Assistance for Needy Families (TANF), is acceptable if it is stable and expected to continue. You must document the receipt of these payments using letters or exhibits from the paying agency that detail the amount, frequency, and duration of the benefits. Crucially, you must demonstrate that the income is expected to continue for at least three years from the date of the mortgage application. Because public assistance is often nontaxable, lenders may gross up the income by 25% to assist in qualifying, provided the nontaxable status is verified.

Short-term disability income is generally viewed as temporary and is not acceptable for qualifying unless it is verified that it will convert to long-term disability benefits. If you are currently receiving short-term disability, lenders may consider it if you can provide documentation confirming the benefits will convert to long-term income and specify the long-term payment amount. In this case, the lender will typically qualify you using the lesser of the short-term or the projected long-term disability amount. Without evidence of conversion to a long-term policy, short-term disability is usually ineligible due to its lack of continuance.

VA disability benefits are eligible qualifying income and are tax-exempt. To document this income, you must provide a letter or distribution form from the Department of Veterans Affairs confirming the benefit amount. For VA retirement or long-term disability benefits, verification of continuance is generally not required, as these are assumed to be stable. However, for other types of VA benefits or those based on dependents, you may need to verify a three-year continuance. Because these benefits are nontaxable, the lender can apply the 25% gross-up factor to increase the qualifying income amount used for the debt-to-income calculation.

To use child support as qualifying income, you must first document the payment terms using a legal agreement, such as a divorce decree, separation agreement, or court order. You must also prove that you have received full, regular payments for at least the most recent six months to establish stability. Crucially, the income must be expected to continue for at least three years; lenders will check the ages of your children to ensure eligibility will not expire within that window. Since child support is nontaxable, lenders can usually gross up the amount by 25%.

Income received from a state or county organization for providing foster care is acceptable if it is stable and likely to continue. Typically, lenders require a two-year history of providing foster-care services to consider the income stable, although a 12-month history may be acceptable if the income does not represent more than 30% of your total gross income. You must verify the income with letters from the organization providing the payments. Additionally, because this income is often nontaxable, it may be eligible to be grossed up. You must typically document that the income will continue for at least three years.

Payments from the Section 8 Housing Choice Voucher Homeownership Program are considered acceptable, stable income for mortgage qualification. Because these housing assistance payments are nontaxable, lenders are permitted to gross up the income by 25% to calculate your adjusted gross income. To qualify, you generally do not need to show a history of receiving these payments prior to the application, but you must document that the benefit is currently available. Additionally, you must verify that the housing assistance is expected to continue for at least three years from the date of the mortgage application.

Social Security benefits may be partially taxable depending on your total income. When calculating the “gross up” amount, lenders only adjust the portion of the income that is nontaxable. For example, Fannie Mae guidelines allow lenders to presume that 15% of Social Security income is nontaxable if tax returns are not provided. In this scenario, the lender would take that 15% portion and increase it by 25%. If you can provide tax returns or other documentation showing that a larger portion of your benefits is tax-exempt, the lender may gross up that higher amount for qualifying purposes.

Yes, long-term disability benefits are an acceptable source of stable income if they are expected to continue. You must provide a copy of the benefits statement or policy from the insurance company or employer to verify the amount, frequency, and current eligibility. If the policy does not have a specific expiration date, the income is generally considered stable and expected to continue. If the policy does have a defined expiration date, you must demonstrate that the benefits will continue for at least three years from the mortgage application date to use the income for qualification purposes.

Social Security income, whether for retirement or long-term disability, requires documentation such as a Social Security Administration (SSA) award letter, an SSA-1099 form, or bank statements showing current receipt. Lenders must verify that the income is likely to continue. If you are drawing benefits from your own work record for retirement or permanent disability, lenders typically assume the income will continue without needing a defined expiration date. However, if the benefits are paid to a dependent or based on another person’s record, you must prove the payments will continue for at least three years.

When qualifying for a mortgage, lenders generally calculate your debt-to-income (DTI) ratio using gross monthly income. Since nontaxable income—such as child support, certain Social Security benefits, or workers’ compensation—is worth more than the same amount of taxable wages, lenders are permitted to adjust these figures upward. This process is called “grossing up.” Typically, lenders add 25% to the verified nontaxable portion of the income,. For example, if you receive $1,000 in tax-free disability benefits, the lender may treat it as $1,250 in qualifying income. This adjustment helps borrowers qualify for a larger loan amount by reflecting their true purchasing power.