Using Part-Time Income to Qualify For a Mortgage

Homebuyers who go from part-time to full-time income mortgage can use the full-time income as the qualifying income when qualifying for an income. 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 a 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 its own set of guidelines when it comes to qualifying income. Yet, within a particular mortgage company, each individual mortgage underwriter may use the 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 an hour and/or salary. Hourly wage earners who work 40 hours per week and have 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. In this article, we will discuss and cover Part-Time To Full-Time Income Mortgage Guidelines.

Part-Time Income When It Comes To Income In Mortgage Qualification

Borrowers can be part-time wage earners 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 incomes 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 a 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 declined.

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%.

Social security income, pension income, and disability income can all be used for mortgage qualification and many times can be grossed up to 15%. On conventional loans, social security income can be grossed up by 25%. Royalty Income can be used if the likelihood is likely for the next three years. Rental income can be used if it is likely to continue for the next three years.

Self Employment Income Mortgage Guidelines

Self-employed business owners can qualify for a mortgage as long as they provide two years of 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 commission income wage earners such as a mortgage broker, mortgage banker, real estate agent, car salesman, or salesperson need a two-year employment history. This holds true even though you get paid by your employer with a W-2. Mortgage underwriters will pay special attention to whether or not these wage earners have had a steady income in the past two years.

How Mortgage Underwriters View Irregular Income

If they had increasing income or steady income for the past two years, both years' income with be averaged.

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
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 employees 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 the borrower can provide 30 days of paycheck stubs Need to be careful about 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 shortfall when it comes to the mortgage qualification and approval process.

Part-Time To Full-Time Income 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 a 6-month gap in employment, need to work for at least six months on a current full-time job in order for them to qualify for a mortgage loan.  Borrowers with six months or less in the gap in employment will qualify for a mortgage right always. This holds true as long as they have obtained full-time employment with written verification of employment.  Borrowers just need 30 days of paycheck stubs in order to close on the home loan.


Peter has 7+ years of experience in residential lending. He is a licensed Realtor in the Chicagoland area.

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