Proving your income is one of the most common requirements for getting a loan, but this step is not always easy. What if you don’t have a regular income? How can you get approved for an apartment rental or loan without it?
While many people have regular income reported on pay stubs and W-2s, a lot of people don’t have this type of income. Instead, they have alternative income.
What exactly is alternative income, and can it help you get the loan you need? Here is a guide to help you know how this works.
The Definition of Regular Income
Before you can understand how alternative income works when applying for rentals or loans, you’ll need to know what lenders consider regular income. Any loan you apply for will require proof of income.
So, what are the different sources of income? Lenders view regular income as the income people earn through pay stubs. If you work for a company, they pay you regular paychecks, and you receive stubs when you get paid.
You’ll have a W-2 at the end of the year to prove this income, and it will also show up on your income taxes. Lenders consider this type of income regular income.
The Types of Alternative Income
People who don’t earn paychecks from their jobs don’t have a regular income, but they might have alternative sources of income. There are multiple sources of alternative income you might have, though.
For example, if you run your own business, you might have 1099s to prove your income. You can use 1099s and other documents as proof of income for the self-employed.
People who run their own businesses can also use pay stub generators to create pay stubs to use for proof of income.
If you receive any type of government income, such as SSI, you can use this income to qualify for a loan. Many lenders consider government payments as income, but some don’t.
For example, Bonsai Finance might approve a payday loan if you have SSI income that you can prove. You can contact a lender to ask about this if you have questions.
How to Use Alternative Income to Secure a Loan
When you want to rent an apartment or apply for a loan, you will need to prove your income, whether regular or alternative. To do this, you can gather any types of documents you have that show your income.
If you have SSI income, you probably have paperwork that shows it. You can also submit your bank statements to show your deposits.
If you are self-employed, you can locate any documents you have that show your income. Finding documents to prove income is essential when applying for any loan type.
Learn More Before Applying
Knowing the difference between regular income and alternative income is vital when you want to apply for a loan. If you need a loan, you might qualify even if you only have an alternative income.
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