There are strict rules regarding the part-time income to full-time income mortgage guidelines. For part-time income to be used, borrowers need two years of consistent part-time income. Besides the two-year seasoning requirement, lenders want to be convinced that the likelihood of the part-time income continuing for the next three years is extremely likely.
Qualifying for a mortgage with multiple jobs is possible if you’ve worked each one for at least two years. Lenders will request written verification from employers, probing about the continuity of the part-time work.
Borrowers can qualify for a mortgage with multiple part-time and full-time jobs as long as they have been on each job for two years. Lenders will want written employment verification from the employer. The employer will be asked if the part-time is likely to continue for the next three years. In the following paragraphs, we will cover part-time income to full-time income mortgage guidelines.
What Determines Qualified Income Going from Part-Time Income to Full-Time Income
Moving from part-time to full-time income can enhance mortgage eligibility by boosting income stability, a significant factor for underwriters assessing repayment capability. Continuity in income is pivotal; both overtime and part-time earnings must have remained consistent for the past two years, with an anticipated continuation for the next three.
Lenders prefer borrowers with a stable income history. Going from part-time to full-time employment can demonstrate an increase in income stability, which can be viewed favorably by lenders.
The ability to repay the new mortgage payment will be a major factor when mortgage underwriters are qualifying borrowers. The income needs cannot be inconsistent or declined to be counted. Same with overtime income. For overtime income to be counted as additional income, borrowers must have had overtime income for the past two years. Mortgage underwriters need to be convinced that the likelihood of overtime income continuing for the next three years is extremely likely. Speak With Our Loan Officer for Mortgage Loan
How Do Underwriters Determine the Full-Time Income Status of Borrowers
Borrowers working at least 30 or more hours per week are considered full-time employees. Income can be used as a full-time income. The borrower needs to be classified as a full-time wage earner. You cannot be classified as part-time if you work 40 hours a week and are considered full-time. However, a minimum of 30 hours is needed weekly to be considered full-time income.
Lenders will also need written employment verification stating that the employee is a full-time employee and the likelihood of employment continuing for the next three years is very likely.
Lenders want to see a continuation of income for the next three years to qualify borrowers. In this article, we will discuss and cover how mortgage borrowers can qualify for a mortgage by going from part-time to full-time and how long they need to be employed full-time. Lenders want to see the borrower’s ability to repay their new housing payments and other bills.
Part-Time Income To Full-Time Income With Two Jobs at Same Time
There are cases where a mortgage loan applicant has two part-time, two full-time, or a combination of full-time and one part-time job. Borrowers with two part-time jobs must have been employed by the two jobs for at least 24 months or two years to use both incomes as qualified income when qualifying for a mortgage.
If one of those two jobs has minimum work hour of 30 per week, that is considered a full-time job. That job can be used as a full-time job, and the other part-time job can be considered a part-time job.
Homebuyers with two jobs can use both incomes if they have been on each job for two years. If a borrower has two full-time jobs, they can use income from both jobs if they have had the two full-time jobs for two years. Both jobs can be used as qualified income if he or she has worked there for at least two years. Verification of employment is required. HR needs to state the employment status of the employee as to whether they are part-time or full-time.
Going From Part-Time Income To Full-Time Income Earner
Part-time wage earners who have had part-time income for the past couple of years and are going to full-time employment and full-time status. The current full-time income can be used to qualify for a mortgage. If borrowers have had part-time income for the past 24 months, the part-time income can be used as qualifying income.
If a borrower is with the same employer and has changed his work status from part-time income to full-time income, there is no seasoning requirement with the new full-time job. If the borrowers change their part-time income to full-time income, the previous wages earned from the part-time job will not be averaged. An offer letter of employment is required, stating the borrower is going from part-time income to full-time income. Speak With Our Loan Officer, Click Here
How is Full-Time Employment Determined Going From Part-Time Income To Full-Time Income
There are specific ways underwriters can use full-time income, going from part-time income to full-time income. The offer letter of employment and verification of employment from the employer are required. If a borrower had a part-time job and got a new full-time job at another company, the full-time job would be the main source of income.
The previous part-time job income will not matter and will not be averaged when you go from part-time income to full-time income. Only the new full-time income will be used as qualified income.
Borrowers with a full-time job and a part-time job at the same time can use both incomes if they have been at both jobs for at least two years. However, if borrowers held a part-time job and had gaps in employment and multiple jobs, they must have been in a full-time job for at least six months for the full-time income to count towards mortgage income qualifications.
Going From Full-Time To Part-Time or 1099 Income
When transitioning from part-time to full-time work, one crucial step involves obtaining verification from the employer regarding the shift in employment status. This verification confirms the commencement of a new phase where the full-time income takes precedence as the primary source. Unlike scenarios where part-time earnings are blended or averaged into the equation, the focus solely rests on this fresh full-time income, which holds weight in mortgage considerations.
On the other hand, juggling both full-time and part-time roles brings its own set of requirements. For both employments to contribute as qualifying income, a steadfast commitment of two years in each role is necessary. Any gaps in employment history must be diligently addressed, demanding a consecutive six-month period of full-time engagement to ensure the inclusion of that specific tenure within the scope of qualifying income. This stipulation emphasizes the significance of consistent and continuous work in both capacities to meet mortgage eligibility standards. Qualify For Mortgage Loan, Contact Us
The Importance of Employment History to Get Mortgage Approval
Lenders often look at your employment history to assess your ability to repay the loan. If you have a solid work history, even if it includes part-time work, it can enhance your mortgage application. Your DTI ratio compares your monthly debt payments to your monthly income. A higher income from a full-time job can lower your DTI, making you a more attractive borrower. Your credit score plays a significant role in mortgage qualification. Ensure your credit score is in good shape, as a higher score can lead to better mortgage terms and higher chances of approval.
The Down Payment and Mortgage Types
Down payment and mortgage loan types are the two biggest factors in determining mortgage rates. The amount you can put down as a down payment also matters. A larger down payment can make you a more appealing candidate for a mortgage. Different loan programs have varying requirements. Some may be more lenient with income requirements, while others may have stricter criteria. Mortgage rates on owner-occupant primary homes are lower than investment home loans:
It’s important to note that every lender may have slightly different criteria for mortgage approval, so it’s a good idea to shop around and compare offers from multiple lenders.
Working with a mortgage broker or loan officer can help you navigate the process and find a mortgage that suits your financial situation. Before applying for a mortgage, it’s advisable to assess your financial situation, create a budget, and consider how the transition from part-time to full-time income impacts your ability to afford monthly mortgage payments. Consulting with a financial advisor or mortgage professional can also provide valuable insights into your situation. Contact Us For Approval Of Mortgage Loan
If you have any questions on how does FHA define family member or borrowers who need to qualify for FHA loans with a lender with no overlays on government or conforming loans, please contact us at Gustan Cho Associates at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
Frequently Asked Questions About Part-Time Income To Full-Time Income Mortgage Guidelines
What are the guidelines for using part-time income to qualify for a mortgage? Borrowers can use part-time income to qualify for a mortgage, but they need a two-year consistent part-time income history. Lenders also want assurance that the part-time income will likely continue for the next three years.
Can I qualify for a mortgage with multiple part-time and full-time jobs? Yes, borrowers can qualify for a mortgage with multiple part-time and full-time jobs if they have been on each job for at least two years. Lenders will request written employment verification from each employer to assess the continuity of part-time work.
How does moving from part-time to full-time income affect mortgage eligibility? Moving from part-time to full-time income can enhance mortgage eligibility by increasing income stability, a crucial factor for lenders. Both part-time and overtime earnings must have remained consistent for the past two years, with an expected continuation for the next three years.
What factors do underwriters consider when determining full-time income status? Borrowers working at least 30 hours per week are considered full-time employees. Underwriters require written employment verification confirming full-time status and the likelihood of continued employment for the next three years.
Can I use both incomes if I have two part-time jobs? If a borrower has two part-time jobs, both incomes can be used if they have been employed by each job for at least 24 months. If one job has a minimum work hour of 30 per week, it is considered full-time, and both incomes can be used accordingly.
How does transitioning from part-time to full-time employment impact mortgage qualification? If a borrower has had part-time income for the past 24 months and transitions to full-time employment with the same employer, there is no seasoning requirement. The new full-time income is used for qualification, and an offer letter of employment is required.
What happens when going from full-time to part-time or 1099 income? When transitioning from full-time to part-time or 1099 income, verification from the employer is necessary. The new full-time income takes precedence; only the income from the new full-time job is considered for mortgage qualification.
How do gaps in employment affect mortgage eligibility when using both full-time and part-time incomes? For borrowers juggling full-time and part-time roles, a commitment of two years is necessary for both incomes to contribute to qualifying income. Any gaps in employment history must be addressed, requiring a consecutive six-month period of full-time engagement.
How important is employment history in mortgage approval? Lenders often consider employment history when assessing the ability to repay a mortgage. A solid work history, even if it includes part-time work, can enhance mortgage applications. A higher income from a full-time job can improve the Debt-to-Income (DTI) ratio, making the borrower more attractive to lenders.
What factors determine mortgage rates? The two biggest factors in determining mortgage rates are the down payment amount and the type of mortgage loan. A larger down payment can make a borrower more appealing, and different loan programs have varying requirements. It’s essential to shop around and compare offers from multiple lenders, as criteria may vary.
This blog about Part-Time Income To Full-Time Income Mortgage Guidelines was updated on January 25th, 2024.
