Nationwide Mortgage Licensing System (NMLS) Practice Exam

How long after the application date must social security payments continue to count as income?

1. 3 months

2. 10 months

3. 2 years

4. 3 years

The correct answer is: 3 years

Social Security payments can be counted as income for the purpose of a mortgage application for an extended period, specifically up to three years following the application date. This guideline is based on the understanding that Social Security income is often reliable and expected to continue without interruption for individuals who are receiving it. The rationale for considering Social Security income for this duration stems from its stability. Many mortgage lenders recognize that Social Security benefits are often a long-term source of income for retirees or individuals with disabilities, creating a confidence in its reliability during the mortgage review process. By providing this allowance, lenders can better assess the borrower's ability to repay the loan, ensuring that a significant and stable source of income is included in their financial evaluation. As a result, the policy reflects a flexible approach to income evaluation, acknowledging that for many, Social Security payments constitute a critical financial resource that can play a vital role in their capacity to meet mortgage obligations over time.