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Preparing Your Income And Expense Worksheet

income and expense worksheetSo far in this series we’ve covered the benefits of a loan modification, the steps to take when applying for a loan modification and how to prepare your hardship letter.

Preparing Your Income And Expense Worksheet is part 4 of this series.  This document is such an important part of the loan modification process, it is vitally important to take the time and make sure it is correct and complete.  This is one document where the “numbers have to add up.”

Your income and expense worksheet will provide a clear financial picture for your lender.  The information you provide will  determine if you qualify for a loan modification.

Now let’s get started.

What Is An Income And Expense Worksheet?

This worksheet is a break down of how much you earn on a monthly basis, what you spend each month and your bank balances.

What Documents Do You Need?

You will need to provide documents of all gross monthly income plus documents that show your monthly expenses  Your ability to qualify for loan modification will be based on the Waterfall Method.  This formula is mandated by the U.S. Treasury department. The  formula, is your gross monthly income, monthly expenses, bank balances and current mortgage balance and current payment.

It’s important to know that this formula requires that your new mortgage payment not exceed 31% of your income. So when working on your income and expense worksheet you need to keep this in mind. If your income is too low or too high you will not qualify for loan modification.

*TIP* In our experience lenders are looking for you to  pretty much “break even” at the end of the month.  A negative or surplus of $100 is usually a good rule of thumb to follow.  So, if you subtract your expenses from your income and you end up with -$87.00, you are good to go!

Here’s a list of income documents to have ready.

Get a folder and label it “Monthly Income Documents”

  • 2 of your most recent paycheck stubs (If you’re married your spouse will need to provide the same)
  • Bank statements from the last 3 months
  • Statements from any additional income ie, child support, social security etc.

Additional Documents

Use a separate folder and label it “Monthly Expenses” and include the following where applicable.

  • Child support
  • Alimony
  • Child care
  • Cable
  • Other mortgage(s)
  • Credit card payments
  • Medical expenses
  • Tuition
  • Rent
  • HOA fees including insurance and any other fees
  • Automobiles
  • Tax liens
  • Utilities
  • Cell phone bill
  • Car Payments
  • Car maintenance, insurance, gas
  • Include any personal loans

Your expenses will help prove financial hardship so it’s really important to include ALL of your monthly expenses.

Bank Account Information

You are only allowed to have a certain amount of available cash in the bank.  If you have too much money in your account you will not qualify.  This does not include your retirement accounts.

Remember, the bank will want to see your bank statements, so resist the urge to lie about how much money you have.   They will also look at your credit report, so they will know how much your car payment is and things of that nature.

Whew!…yes that’s a lot of documentation to gather.  This is where hiring a loan modification service would be a good idea.  They can really help you out with this process.  Don’t worry we’ll cover loan modification services later in this series.

In the meantime, start getting your documentation together.  You want to give yourself plenty of time to get as much as possible.  Check and then check again to make sure you include all of your expenses and income.

In part 5 of this series, you’ll learn  how and why “Following Up With Your Lender” is an important part of the loan modification process.


Call 888-766-3693 if you have any questions about modifying your loan.  You can also visit our Loan Modification Company Reviews page.

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