As part of the loan application, lenders also require that you inform them of your annual income. More than focusing on the amount however, they are looking for consistency in income. If a lender concludes that you have a regular, reliable monthly income over the last few years, you are more likely to be approved for a loan, because they see it as less of a risk. The more consistent your annual income is, the less like you are to default on a loan.
In the case of mortgage applications, lenders primarily focus on income through wages or salary, since those are the most consistent. Your annual income along with your debt-to-income ratio is used to evaluate whether you can make monthly mortgage payments.
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