What is considered optional income on a mortgage application?

In the context of a mortgage application, optional income refers to sources of income that a borrower may receive but are not required for the borrower to meet their financial obligations. Alimony and child support fit this definition because they are typically considered additional financial support and can vary in amount or duration. Since they are not guaranteed to continue indefinitely, lenders may categorize them as optional income. Borrowers are not obligated to rely on these payments in order to maintain their financial status, especially if they can qualify for a mortgage using only their primary, more stable income sources.

In contrast, investment income, retirement benefits, and disability income are often viewed as more stable and consistent sources of income. Investment income can fluctuate based on market conditions, but it is not typically viewed as "optional." Retirement benefits are often considered a reliable source of income during retirement years, while disability income is intended to replace lost income due to an inability to work, which positions it as a necessary source for those who are disabled. Thus, these forms of income do not align with the concept of "optional" income as closely as alimony or child support does.