4 Reasons NQDC Impacts Mortgage Eligibility 🏠💡

💰🏠 Understand how Non-Qualified Deferred Compensation (NQDC) can affect mortgage eligibility.

This article explains why NQDC is not treated like a standard 401(k) contribution by lenders. Lenders typically rely on gross income but scrutinize stable, qualifying monthly income available to pay the debt. When NQDC deferrals are large or mandatory, underwriters may subtract them from your reported income, lowering your effective earnings and widening your debt-to-income ratio. As a result, you may qualify for a smaller loan or face a tougher approval even if your total compensation is high.

Key points covered:
How NQDC appears on pay stubs and W-2s, and how retirement plans can be added back in certain scenarios
Why substantial deferred compensation can become “invisible income” to underwriters
Regulatory guidelines that may require reducing income when NQDC is significant
The importance of providing full NQDC plan documentation upfront
Practical steps to improve mortgage qualification, including documenting NQDC and considering alternative compensation sources

Takeaways: Always disclose the full NQDC plan, anticipate tighter income scrutiny, and avoid counting on deferred compensation as immediately available cash for a mortgage.

Practical tips:
Collect the full NQDC plan document, the latest statement, and a summary of deferral timing
Work with your loan officer to map out how NQDC will be treated in your debt calculations
If feasible, adjust the deferral amount or timing, or bolster your profile with non-deferred income
Consider alternative loan programs or lender guidance to maintain your home-buying timeline


00:00 NQDC & Loans
00:19 Agenda
00:46 The Myth
01:06 How It Works
01:55 Decision Flow
02:37 NQDC vs 401k
03:15 Docs
04:01 Steps
04:40 Case Study
05:23 Quiz 1
05:56 Answer 1
06:11 Quiz 2
06:42 Answer 2
06:56 Timeline
07:20 Disclaimer
07:38 Takeaways
08:09 Markdown
08:31 Wrap-Up
08:53 CTA