Part-Time To Full-Time Income Mortgage Guidelines
This BLOG On Part-Time To Full-Time Income Mortgage Guidelines Was UPDATED On October 22nd, 2018
Part Time To Full Time Income In Mortgage Qualification:
- Income in mortgage qualification is the most important factor in qualifying for a mortgage
- Borrowers can have prior bad credit, collection accounts, charge offs, bankruptcy, foreclosure, deed in lieu of foreclosure, short sales, low credit scores and still qualify for a mortgage
- But cannot qualify for mortgage if they cannot document income
- Income is kind of tricky when it comes to qualifying for a mortgage
- There are certain ways mortgage underwriters qualify income for a mortgage loan applicant
- Not all mortgage companies qualify income the same way
- HUD, VA and Fannie Mae and Freddie Mac have their own guidelines when it comes to qualifying income
- Each mortgage lender can have their own set of guidelines when it comes to qualifying income
- Yet, within a particular mortgage company, each individual mortgage underwriter may use underwriter’s discretion in qualifying income for a particular loan applicant
W-2 Income In Mortgage Qualification On Salary And Hourly
Salary and hourly income wage earners are the easiest and quickest way to qualify when it comes to qualifying for income for mortgage qualification.
- The easiest borrower to qualify when it comes to income for mortgage qualification is when a mortgage loan applicant makes a certain amount a hour and/or salary
- Hourly wage earners who work 40 hours per week and has been in their current job for 2 years are the easiest types of borrowers to qualify
- Same with salary income wage earners where they make a certain salary and have been on their job for at least two years as a full time salary wage earner
- Overtime and other income wage earners can use OT/other income if it has been seasoned for two years
Part Time Income When It Comes To Income In Mortgage Qualification
Borrowers can be a part time wage earner and use that part time income in mortgage qualification as long as they have been in your part time job for at least two years.
- There are workers who do not have full time jobs and have two or mortgage part time jobs
- Borrowers can use all part time job wages as long as they have been a part time wage earner for at least two consecutive years
- Cannot use the part time income or multiple part time income if they have not been employed as a part time wage earner for at least two years
Overtime And Bonus Income In Mortgage Qualification
Overtime and bonus income can be used to qualify for mortgage as long as the wage earner has had a history of earning overtime income and bonus income for at least two years.
- Need verification of employment from the employer states that the overtime and bonus income will continue for the next three years
- Overtime and bonus income cannot be declining
Social Security Income, Pension Income, Disability Income
Social security income, pension income, and disability income can all be used for mortgage qualification and many times can be grossed up to 15%.
- Royalty Income can be used if the likelihood is likely for next three years
- Rental income can be used if it is likely to continue for next three years
Self Employment Income Mortgage Guidelines
Self employed business owners can qualify for a mortgage as long as they provide two years tax returns.
- Self employment income borrowers often times have a difficult time when qualifying for a mortgage due to the many write offs
- Only the adjusted gross income will be used when qualifying income for self employment income borrowers
Commission income paid via W-2
1099 wage earners and/or or commission income wage earners such as a mortgage broker, mortgage banker, real estate agent, car salesman, or sales person need a two year employment history:
- This holds true even though you get paid from your employer with a W-2
- Mortgage underwriters will pay special attention on whether or not these wage earners have steady income in the past two years
- If they had increasing income or steady income for the past two years, both years income with be averaged
- If the commission income wage earner had declining income, the most recent declined income will be used
- The 12 month average of that year will be used for income mortgage qualification
Part-Time To Full-Time Income Analysis By Underwriters
There are special regulations when it comes to part time to full time income in mortgage qualification.
- Part time employees or temporary employee with an employer and who went from part time status to full time status with the same employer recently, lenders like myself will go off the full time income
- This holds true as long as they can get a written verification of employment stating this fact
- We will not average part time income to full time income
- We will just go off full time income as long as borrower can provide 30 days of pay check stubs
- Need to be careful on which mortgage lender borrowers choose
- Depending on the lender, many lenders will average part time income and full time income for the past 24 months
- Many times this will create a short fall when it comes to mortgage qualification
Employment Gaps Mortgage Guidelines
Borrowers can have gaps in employment in the past two years and still qualify for a mortgage loan. Borrowers with more than 6 month gap in employment, they need to work for at least six month on current full time job in order for them to qualify for a mortgage loan. Borrowers with six months or less in gap in employment, they will qualify for a mortgage right always. This holds true as long as they have obtained full time employment with a written verification of employment. Borrowers just need 30 days of paycheck stubs in order to close on home loan.