What does eligible income refer to in mortgage qualification?

Eligible income in the context of mortgage qualification refers specifically to income sources that are accepted by lenders for the purpose of assessing a potential borrower's ability to repay a loan. This typically includes a variety of income types such as wages, bonuses, commissions, alimony, child support, self-employment income, investment income, and other sources deemed acceptable by the lender.

Lenders use these eligible income sources to calculate the borrower's debt-to-income ratio, which is crucial for determining their borrowing capacity. This means that, unlike merely stating any money a borrower wishes to claim or limiting eligibility to only salary from full-time employment, eligible income provides a structured framework for what can actually qualify. Recognizing eligible income allows both lenders and borrowers to understand an applicant’s financial situation more clearly and facilitates informed lending decisions. This is why the correct choice centers on the various income sources accepted by lenders, highlighting the importance of a comprehensive approach to evaluating financial capability in securing mortgage finance.