Navigating Mortgage Qualification with Part-Time, Seasonal, and Secondary Income Sources

Do you have a part-time job, work in the gig economy, or have a seasonal income source? With the rise of the internet, many people have taken up secondary jobs to supplement their income. This article will guide you on how to qualify for a mortgage with your non-traditional income sources.

Understanding Different Types of Income

• Part-Time Job: A job that involves working less than 40 hours per week.
• Gig Job: Includes driving for Uber or Lyft, working for DoorDash, or running an Etsy store.
• Secondary Employment: People who have two jobs, possibly with different hours.
• Seasonal Work: Employment occurs only during specific periods, such as a teacher working in a summer school program.

How Mortgage Agencies Treat Non-Traditional Income

To qualify for a mortgage, there are five agencies: Fannie Mae, Freddie Mac, FHA, VA, and USDA. Each agency has guidelines for calculating part-time, secondary, and seasonal income. It’s essential to be aware of these guidelines to know which agency is best suited for your situation.

Fannie Mae Guidelines for Part-Time and Secondary Income

1. A two-year history of part-time or secondary employment is required.
2. No employment gaps greater than 30 days in the past 12 months.
3. Different employers are acceptable as long as there are no significant gaps.
4. If your part-time job is similar to your full-time job, that’s even better.
5. A shorter employment history of 12-24 months may be considered if you have positive factors to offset it.

Freddie Mac, FHA, VA & USDA Guidelines for Part-Time and Secondary Income

This video covers the underwriting guidelines for all agencies.  If you’re looking for specific guidelines, the slides on the video identify which agency I’m talking about.

Underwriter Discretion and Lender Overlays

Understanding that mortgage approvals are subject to underwriter discretion and lender overlays is crucial. Underwriter discretion refers to the underwriter’s judgment based on credit score, debt-to-income ratio, and employment history. Lender overlays are additional rules imposed by lenders, which may be more strict than the guidelines provided by mortgage agencies.

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Key Points to Remember

• Not all lenders follow the same rules; some may have stricter requirements.
• Be aware of lender overlays that may affect your mortgage qualification.
• Seek assistance from a knowledgeable mortgage professional to navigate the complex process.

Conclusion

Qualifying for a mortgage with part-time, seasonal, or secondary income sources can be challenging, but it’s possible. It is crucial to understand the different types of income and how mortgage agencies treat them. Remember to be aware of underwriter discretion and lender overlays when seeking a mortgage, and consult with an experienced mortgage professional for guidance.