Freddie Mac Part-Time Income Mortgage Guidelines

Freddie Mac Part-Time Income Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers Freddie Mac part-time income mortgage guidelines. 2023 has already come with some big changes for the mortgage industry. Recently, FREDDIE MAC has made a major announcement regarding income calculations. In this blog, we will go over the new income guidelines. We will cover when it will go into effect. We will also cover how the guideline is different from the current rule. We will show you how to apply for a conventional mortgage with Gustan Cho Associates. In the following paragraphs, we will cover Freddie Mac part-time income guidelines on conventional loans.

Freddie Mac Part-Time Income and Irregular Income Guidelines

YouTube player

When it comes to evaluating income, the major agencies set the standards. Freddie Mac has recently changed its guidelines with an updated BULLETIN. Freddie Mac separated base wages into two categories. They focus on base “non-fluctuating” and “fluctuating” hourly employment. Base “non-fluctuating” means a salaried employee. “Fluctuating” employment earnings include commission, bonus, overtime, and tip income.

Freddie Mac required a two-year history in the workforce before being able to qualify for a mortgage for a long time.

This is nothing new. There are instances where you can qualify for less than two years, such as being a full-time college student and entering the workforce as a full-time employee. You can qualify for a mortgage because they consider your full-time college the same as working a full-time job, creating at least a two-year history. A change in this guideline is for “fluctuating” hourly employment earnings.

Freddie Mac Part-Time Fluctuating Earnings

With this new change, a borrower must be employed with “fluctuating” hourly employment earnings for 12 months before qualifying for a mortgage (even if a full-time student before starting this job). This rule is only for “fluctuating” earnings. The new rule also requires a full six-month job history to be considered “non-fluctuating” hourly income earners. The lender must document a six-month work history with the same number of hours with the same employer to be considered “non-fluctuating earnings.

Freddie Mac has stated that “fluctuating” hourly employment earnings are considered income based on an hourly rate of pay for the number of hours that fluctuate each pay period.

The new income calculation requirements for fluctuating employment income types such as hourly, overtime, bonus, commission, and tips must be based on whether the income trend is consistent, increasing, or decreasing. That said, Freddie Mac has added requirements when income fluctuation between the previous year and the current year-to-date exceeds 10. This analysis will show a high degree of volatility or any regular pattern requiring longer periods on the job to count as qualifying income.

Importance of Freddie Mac Part-Time Income Guideline Changes For 2024

Why is this guideline change important? After reading the paragraph above, there is more than likely some confusion. Freddie Mac has changed their guidelines to eliminate confusion and create a standard for qualifying income regarding “fluctuating” income sources. The old guideline would allow a borrower to use a recent raise as a qualifying income.

Case Scenario of Freddie Mac Part-Time Income Guideline Changes

Let’s take a case scenario to explain. Example:  if you are an hourly employee receiving $15 an hour for 40 hours a week and recently received a $2 an hour raise, The mortgage company would allow qualifying income to be based on $17 an hour for 40 hours a week. Of course, you would need a written verification and a pay stub to match these numbers.

  • $17 * 40 hours per week = $680 per week or $2,946.66 per month

Under the new guideline, you must work a 40-hour workweek with your $ 17-an-hour raise for six months before that income can be used as qualifying income. Before that six-month marker, your income would be calculated at $15 / hour.

  • $15 * 40 hours per week = $600 per week or $2,600 per month

As you can see, there is a difference of $346.66 in qualifying income, which is substantial. Freddie Mac has encouraged all lenders to start the new practice immediately. This became a guideline on April 2nd, 2020. It is unclear if Fannie Mae, FHA, and VA plan to follow these changes.

Getting Started In Getting Qualified For a Mortgage

Applying for a conventional mortgage with Gustan Cho Associates is very easy. Depending on your qualifications, a conventional mortgage may be your best option. To apply for a conventional mortgage, call Us at (800) 900-8569, or you may email You and Mike will discuss your mortgage qualifications and determine which program suits you best. After your one-on-one mortgage consultation, you will be paired with a licensed loan officer in your state. Your loan officer will send an application link, and you will send in the following documentation:

  • Last 60 Days Bank Statements – to source down payment
  • Last 30 Days Pay Stubs
  • Last Two Years, W2’S
  • Last Two Years Tax Returns – not needed for W2 only employees
  • Driver’s License or Government Issued Photo ID

Your loan officer will review your income and asset documentation. This will let us know exactly what you qualify for. You will then be sent a PRE-APPROVAL LETTER or a financial plan stating what needs to be accomplished to qualify for a conventional loan. Either way, you will have written documentation showing you qualify or in easy-to-follow the financial plan of attack to get you and your family into a house as soon as possible.

Lender With No Overlays on Freddie Mac Part-Time Income Guidelines

Gustan Cho Associates Mortgage Group specializes in all mortgage products, including Freddie Mac conventional mortgages. Please remember, we offer these mortgages without any LENDER OVERLAYS. Many of our clients have already been turned down by their current lenders and are looking for other options. There is less flexibility when it comes to conventional mortgages compared to FHA. Please click here for more information on FHA MORTGAGES. The team at Gustan Cho Associates is available seven days a week to answer your mortgage-related questions. For more information and to stay updated with mortgage guidelines, please subscribe to our YouTube CHANNEL.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *