Facebook Twitter Instagram
    Mortgage.info
    • First Time Homebuyer
    • Loan Programs
    • VA Programs
    • Refinancing
    Mortgage.info
    Home»Loan Guidelines»How Part-Time Income can Qualify You for a Mortgage
    Loan Guidelines

    How Part-Time Income can Qualify You for a Mortgage

    Tech AdminBy Tech AdminApril 1, 2016Updated:August 19, 2016No Comments5 Mins Read
    Facebook Twitter Pinterest LinkedIn Tumblr Email
    Share
    Facebook Twitter LinkedIn Pinterest Email

    How Part-Time Income can Qualify you for a Mortgage-MORTGAGE.INFOPart-time income is not often thought of as qualifying income for a mortgage. If it is not steady full-time income, most lenders don’t want to look at it. Some lenders do accept it however on a variety of loans, including VA and FHA loans. You may earn the part-time income on its own or in conjunction with a full-time income – as long as your other factors fall into place for a loan, you may be able to use this income for qualifying purposes. So how do you know if your part-time income will qualify? Here are a few simple guidelines.

    Steady Income is Important

    The one factor any lender wants is consistency in any factor that applies to your mortgage application. They want to see that you are a stable risk. When it comes to your income, this means that you received the income for a steady number of years. Typically, the magic number is 2 years, but every lender is different. Does this mean you have to have the same part-time income from the same company for two years? For some lenders the answer is yes, while others do not care as much which company the income comes from, just that you receive the income and there are no gaps. If you have a good reason for changing companies, such as you moved to another part of town or the company closed, then the change is not as detrimental to your mortgage file. If you know you want to apply for a mortgage, try to keep the same part-time job for a long period of time before applying. Any sudden changes, including changing jobs could make your loan profile less attractive.

    Assets are Crucial

    One aspect all lenders want no matter the type of loan or income is the presence of assets. Having reserves is worth its weight in gold to lenders. When you have several months’ worth of mortgage payments set aside in a savings account, lenders are more willing to work with you because you bring the level of risk down for the mortgage. What reserves show is that you know how to manage your money and that you can save money even with part-time income. It shows the lender that you do not max out your spending and live paycheck-to-paycheck, which can be too risky for a lender to take on. In general, the more months’ of reserves you have on hand, the higher your chances of getting a mortgage get.

    Debt Ratios Play a Role

    The key factor in getting approved for a mortgage is your debt-ratio, especially in the presence of the Qualifying Mortgage guidelines. Lenders are not allowed to provide loans to those with high debt ratios and still fall under the Qualifying Mortgage guidelines. Lenders that choose to provide loans that are not qualified are not protected from litigation from the borrowers should they default and lose their home. Because of this, many lenders are very picky about debt ratios. If your part-time income does not allow your debt ratio to fall under the maximum 43 percent set forth by the government, then many lenders will not be willing to provide you with a loan. If you are trying to use your part-time income as a compensating factor to help bring your debt ratio down in combination with your full-time income, however, you will have an easier time.

    Providing Proof of Continuance

    One thing most lenders look for when using part-time income for qualifying purposes is the proof that it will continue. This is when the history of your income plays a vital role. If the part-time income is fairly new, there is not a lot of guarantee it will continue unless you have something in writing from your employer. If you do not have any type of proof and a short history, it may not be used. On the other hand, if you have held this job for many years and it is in a stable industry, many lenders will allow its use in order to help bring your debt ratio down. If your employer can provide some type of proof – even a letter on their letter head stating that you will continue to receive the income for the foreseeable future, many lenders can allow the income to be used.

    Try to Stabilize your Hours

    One of the hardest factors surrounding part-time income is the inconsistency in the hours. If you receive a few hours one week and then many hours the next, it is hard for lenders to come up with a qualifying income. On the other hand, if you work the same amount or relatively the same amount of hours every week, your income is easier to predict for qualifying purposes. If you know you are going to apply for a loan, try to talk to your employer about simplifying your hours so that you can have an easier time qualifying for the loan.

    In the end, there are many lenders willing to use part-time income for qualifying purposes. What it all comes down to is the entire picture you provide. Just part-time income on its own will not determine if you can or cannot get a loan. What matters is how many months of reserves you have on hand; what your debt ratio is at the time of application; and how likely your income is to continue. Lenders do not want to take huge risks, but with loans that are backed by the government, such as FHA and VA loans, there is a slightly higher chance that riskier loans will get approved. What this means is do not give up if you have part-time income – get out there and try to find a lender that will provide you with the funding you need with the income you provide.

    Click Here to get matched with a Lender»

    income qualifications mortgage income guidelines part-time income
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Tech Admin

    Related Posts

    Is It a Good Idea To Get a Mortgage With a Cosigner?

    July 7, 2022

    Tips for Unmarried Couples Planning to Buy a Home

    February 28, 2022

    Common Mortgage Requirements for First-Time Home Buyers

    August 5, 2021
    Mortgage.info
    © 2025 Mortgage.info Designed by ThemeSphere.

    Type above and press Enter to search. Press Esc to cancel.