When a lender is looking at a person's ability to repay a mortgage, they look to see if an applicant has the ability and strength and history to repay.  This review is based on normal conditions as well as possible adverse situations (higher ratios - reserves, etc.) 

Income can come from several sources.  The key is if it is current, ongoing, stable and anticipated to last for at least 3 years.   

Income:  salary, hourly wage, commissions, overtime, 1099's, or government assistance.  Any income that is variable normally has to have a two year historical average. 

Verification:  verification of employment (VOE), past 30 days pay stubs, W-2's, most recent back statements (2), recent tax returns (2), and if applicable social security or retirement letters.