What does the durability of income refer to in mortgage lending?

The durability of income in mortgage lending specifically refers to the longevity of the income source. Lenders assess whether an applicant's income is likely to continue over time, which is crucial for determining the borrower's ability to make consistent mortgage payments. If a borrower has a stable and reliable source of income, it assures the lender that the borrower will be able to meet ongoing financial obligations, reducing the risk associated with the loan.

In evaluating the durability of income, lenders might look at factors such as the employment history, the industry stability, and the likelihood of continued work or income generation. An income source that is expected to last and is not tied to short-term contracts or non-renewable situations represents a lower risk for lenders because it implies consistent repayment capability.