For income to qualify, it must meet the likelihood of continuance test for how many years?

To qualify for a mortgage, income must demonstrate a likelihood of continuance, which typically requires a history of stability and consistency. This is commonly interpreted as needing to be documented over a minimum period of two years.

Lenders often look for this two-year history when assessing employment income, providing a benchmark that helps them evaluate whether borrowers can reliably make mortgage payments. This includes reviewing W-2 forms, pay stubs, or tax returns to verify that the income received is not only current but also sustainable over the foreseeable future. This two-year observation helps lenders gauge trends in a borrower's income and assess any potential fluctuations that might occur.

Other time periods, such as one year or five years, are not standardly used for this purpose, as one year might not provide sufficient data to accurately assess income stability, while five years could be seen as excessive for common lending criteria. Thus, the two-year requirement highlights a balance between thorough analysis and practical lender policies in evaluating a borrower's income qualifications.