I remember thumbing through the Recycler in Los Angeles when I first moved out there as a teenager. Living on a shoestring budget, I was especially intrigued by the ads that promised the ability to make thousands per month while sitting in the comfort(?) of your home. In my mind, that meant I could keep my day job, practice guitar eight hours and day and still have some other check rolling in without too much trouble. Who wouldn’t like that? I never actually pursued any of these trinket-making, envelope-stuffing, part-soldering side hustles, but the reality of part-time income, either as a primary or supplemental source of monthly revenue, is appealing to many and necessary for some. But what happens when these individuals make a mortgage application and attempt to qualify with some or all of this income?
Part-Time Income
Just because you don’t work a full 40 hours a week does not mean you are disqualified from getting a great home loan. Maybe you have a seasonal job or a position that does not require a set schedule. If you have a two-year history of earnings in this role and you can document this with paystubs, W-2 forms, tax returns and a verification of employment, you’re in business in our eyes. Consistency is key and the more you have of it, the easier it will be to qualify your income from a part-time position.
Secondary Income
In today’s gig economy, many individuals earn extra income through a secondary position, such as driving for Uber or Lyft, for example. Still others, because of a highly refined skill in technology and/or medicine might find themselves effectively working a second job due to their expertise (and assuming a non-compete clause doesn’t prevent them from doing so). Here too, even if the income earned is substantial, we will generally not qualify it unless there is at least a two-year, documented history of its earning. We must also show that the secondary position continues, so we would verify this employment with the employer just as we’d typically do for your primary job.
Burning the Candle at Both Ends
Here are some of the things that will disqualify, or at the very least make challenging, the use of secondary or part-time income.
- Payments in cash.
- Irregular schedules.
- Multiple secondary jobs that do not appear stable.
- Part-time positions that do not appear to be ongoing.
- Second jobs that pay you as an independent contractor (1099). These technically create a “self-employment” situation where we would need a two-year history of tax returns which support consistent self-employed income.
This is not a complete list, but it will give most a good sense of whether their scenario might get consideration by a mortgage lender and allow them to use the income to help qualify for a home loan. If you have secondary or part-time employment and you need it to help you purchase or refinance, get in touch at any time and we’ll be happy to assess your situation and advise on what’s possible.
Help wanted,
Rob Spinosa
Senior Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.
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