When should income types need to be disclosed by a loan applicant?

The correct answer emphasizes the importance of transparency in the loan application process. When an applicant is relying on specific income types to qualify for a loan—such as bonuses, overtime, rental income, or any other non-salaried income—it's crucial to disclose that information. This allows lenders to assess the applicant's financial situation accurately and determine their ability to repay the loan.

Income types that an applicant expects to use for qualification purposes impact the underwriting process. If the income is not disclosed and indeed relied upon, it could lead to misrepresentations or challenges in the future if the borrower struggles with making payments. Generally, lenders have specific criteria for what qualifies, and disclosing this information helps in making informed lending decisions.

In contrast, other choices suggest scenarios that do not align with best practices in the application process. For example, disclosing income only if asked by the lender does not promote a proactive approach to full financial disclosure. Additionally, waiting for an income threshold to be exceeded neglects the essential requirement to evaluate all income that supports a loan request. Therefore, the obligation to disclose applies primarily when that income is a crucial part of the eligibility criteria for the loan.