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Step 6: Consider leaving out income you don't need

My last category of adjustments to get from taxable income to recurring cashflow is really just a time-saver. I call it nondocumented income.

Let’s say you already have your borrower qualified easily (in these economic times that sounds great)!

And on a personal loan or a guarantor analysis, they have alimony. You don’t need it to qualify and you don’t want to bother your borrower to provide a divorce decree when, well, you don’t need it to qualify.

So consider which income sources you don’t need. Then consider leaving that income out of cashflow.

How do you decide?

  •  Do your guidelines allow you to leave income off that you don’t need to qualify the borrower? (Consumer/Mortgage: probably. Commercial: Maybe)
  •  Is this one of a series of loans in which for later planned ones you probably will need it?

If you decide not to use it, at least make a list in a visible place of income sources you did not include but could be considered if needed. Here is the short list of possibles:

  •  Alimony/child support received
  •  Contract/Note receivable
  •  Capital Gains
About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.