What type of income is considered eligible by lenders when received due to a disability?

Disability income is recognized by lenders as eligible income primarily because it provides a consistent and reliable source of funds that can be used to make mortgage payments. Lenders evaluate the overall financial situation of a borrower, and income from disability benefits is often documented through official statements or award letters, demonstrating the borrower's capacity to repay the loan.

Disability income typically has a defined duration and amount, contributing to the borrower’s overall financial stability. This type of income often comes from government programs or private insurance, both of which have specific criteria for providing proof of income. Since it is designed to replace lost wages due to a disability, it is considered a legitimate and acceptable form of income for qualifying for a mortgage.

Other types of income, such as rental income, employment income, and investment income, may also be considered by lenders, but they come with different levels of verification and stability. For example, rental income may depend on market conditions, and employment income can fluctuate based on job stability or hours worked. Therefore, recognizing disability income as eligible directly speaks to the lender's desire to evaluate consistent and reliable sources of income in their loan underwriting process.