Mortgage Qualifying With Part Time Income And Overtime Income

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Mortgage Qualifying With Part Time Income And Overtime Income

This BLOG On Mortgage Qualifying With Part Time Income And Overtime Income Was UPDATED On October 23rd, 2018

One of the biggest hurdles many mortgage loan borrowers face is having a high debt to income ratio when qualifying for a mortgage loan.

  • Most lenders have overlays on debt to income ratios.
  • Lender overlays are lending requirements that are higher standards than those imposed by HUD, the parent of FHA.
  • For example, borrowers who have a $2,000 monthly gross income, total monthly bills which includes mortgage payment cannot exceed $800 with a lender who has lender overlays capped at 40% debt to income ratio. 
  • HUD Guidelines On Debt To Income ratios is 46.9% DTI front end, and 56.9% back end to get an approve/eligible per Automated Underwriting System for FHA insured mortgage loans. 
  • Part time income and overtime income can be used to boost borrowers monthly income
  • Can only be used if borrowers had a two year seasoning of part time and/or overtime income

Mortgage Qualifying With Part Time Income Can Be Used With 2 Year Seasoning

Having a high debt to income ratio can disqualify a mortgage loan borrower in getting a mortgage approval.

  • Many borrowers have part time income and are paid in cash
  • Unfortunately, undocumented part time income cannot be used in a mortgage application
  • Only documented part time income with longevity can be used to calculate borrowers income

Part Time And Other Income Likelihood Of Continuation

To be able to use part time income for mortgage qualification purposes, borrower must have had the part time income for at least two years.

  • It is the same case with overtime income
  • If borrower has had two years of consistent overtime income, we can use the overtime income as additional monthly gross income to offset the high debt to income ratios
  • In order to use part time income, the mortgage loan borrower needs to have worked for at least two years

Part Time Income With Less Than 2 Years

If borrower has worked his part time job for less than two years, we can probably still get to use the part time income. This only holds true if borrower can get a letter from his or her human resources department. Letter stating that he or she will be guaranteed the same amount of hours in the next six to twelve months can often do the trick:

  • The same apply to overtime income
  • If borrower has had overtime income for less than two years, they need to get a letter from their personnel department that the overtime is likely to continue for the next six to twelve months

Overlays On Debt To Income Ratio

Borrowers high debt to income ratios and need to qualify for a mortgage,  please contact us at 1-262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.  We are mortgage bankers and correspondent lenders with no overlays. Most mortgage companies have debt to income ratio caps at 45% due to their lender overlays. However, we only go by AUS FINDINGS and minimum federal HUD and Fannie Mae mortgage lending guidelines of  46.9%/56.9% debt to income ratios on FHA Loans and 50% DTI on conventional loans.

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