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My Mortgage Lender keeps changing income requirement rules on me


RandomHomeBuyer
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Hello all,

I am a first time home buyer attempting to secure a mortgage. I have excellent credit, and a 20% or more downpayment, but unconventional income structures that seem to be giving my bank red flags. But I also feel like they're changing the rules on me.

 

I work 20 hours a week for one job, Job A. It hasn't changed for the entire 2.5 years I've had it. The hours and pay don't change. They are fine with it.

 

Job B is with another company. I've been with them the same amount of time, but took a year off during the pandemic. I came back to a promotion and pay raise. It is also a part time job. The hours and pay have steadily increased for the entire duration I've had the job. About half a year ago I got another promotion and raise. Last month I got another raise. It is a good job! But unconventional and the weekly hours fluctuate. Some days I work 12 hours, other days only 3. 

 

Normally, they would take an average of the last 24 months and come up with a number. But since I took a year off, there's not 24 hours total to draw from, so they won't consider it at all. Question 1: Is that normal? 

 

Here's another wrench. I am told that if I go full-time with job B, they will consider the full amount of current income and not do a 24 month average. I have a potential opportunity to grab a full time position. Another raise and promotion. So I call them up and ask if I should proceed.

 

Now they tell me that because of the amount of hours I'd be working, I'd need to have 24 months of both jobs at the same time to demonstrate that I can reliably work 60+ hours a week. OR, they would alternatively throw out the part time job A and only consider Job B at full time. This feels exceedingly nit-picky and arbitrary to me, especially since they would then be tossing out the job that actually has the 24 months of proof. They tell me to find a full-time position to consider all the income, and when I do they tell me they still need either 24 months proof of income or to toss one of them out. 

 

What are your thoughts? Is this actually Fannie / Freddie guidelines as they claim or are they trying to get rid of me?

 

Thanks in advance. 

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What you've been told is correct, in order to use a 2nd job as employment you must have a history of working 2 jobs for at least 24 months (full time or part time) and if you want to use part time employment to qualify then that also requires 2 years (that can be a mixture of full & part time employment).  The reasoning is if there is an ample amount of time employed in that manner it's less likely you'll quit right after closing and lose that income you used to qualify with.  In your situation you would've been employed for 24 consecutive months at both jobs but there was the gap during the pandemic, which unfortunately lender's don't make exceptions for. 

 

If you are short on the amount of income needed to qualify then it sounds like the way to increase your income would be to go full time at job B so the full time wages can immediately qualify and then keep job A as supplemental income.  If that still doesn't give you enough qualifying income then there are "no ratio" loans which don't have a DTI requirement but they have larger down payment requirements (usually 20%+), reserve requirements (usually 12-18 months worth) and rates are higher.  You could also look into a non-occupying co-borrower (co-signer) to help reduce your DTI on paper.

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  • 5 weeks later...
On 7/21/2022 at 9:01 PM, liverichly said:

What you've been told is correct, in order to use a 2nd job as employment you must have a history of working 2 jobs for at least 24 months (full time or part time) and if you want to use part time employment to qualify then that also requires 2 years (that can be a mixture of full & part time employment).  The reasoning is if there is an ample amount of time employed in that manner it's less likely you'll quit right after closing and lose that income you used to qualify with.  In your situation you would've been employed for 24 consecutive months at both jobs but there was the gap during the pandemic, which unfortunately lender's don't make exceptions for. 

 

If you are short on the amount of income needed to qualify then it sounds like the way to increase your income would be to go full time at job B so the full time wages can immediately qualify and then keep job A as supplemental income.  If that still doesn't give you enough qualifying income then there are "no ratio" loans which don't have a DTI requirement but they have larger down payment requirements (usually 20%+), reserve requirements (usually 12-18 months worth) and rates are higher.  You could also look into a non-occupying co-borrower (co-signer) to help reduce your DTI on paper.


thanks for your response. I read it before but couldn’t add a reaction. 
 

my situation has changed a bit now. I’ve been able to acquire a new full time position. It’s actually the same as my old position, but now full time, which is great - it makes things easy for me. 
 

that said, the banks are being real sticklers again. (I know, shocking right?) I’ve been told that I need to work exactly 40 hours a week to qualify. This seems unrealistic. I assume there are people out there who are scheduled for 40 hours and work all 40 of them every week, but I’m not one of them. My daily schedule fluctuates based on how my day goes, maybe similar to a delivery agent like UPS or something. 
 

but now that it’s a full time position, they shouldn’t care about slight fluctuations right? For some reason, now that it’s a full time position they can estimate going forward, instead of using a 2 year history. They only need a few paystubs to verify, maybe 2 paystubs for a month or so of work. Are they going to quibble again if they see slight fluctuations in pay? What are my options?

 

thank you!

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If your employment is less than 40 hours a week but still is full time hours then it can still be considered full time employment, but most lenders will usually need at least 32+ hours worked per week.  In your situation it's not a brand new job and you have a history of working less than full time, so you're really going to need to put in some effort documenting that it is actually full time.  I'd recommend you get something in writing from your employer that confirms the hours you are working qualify you as a full time employee with full benefits, etc.  Assuming you are paid hourly (vs. a salary) lenders will need documentation of your average full time hours in order to properly calculate your income, that can be obtained by your employer completing a Verification of Employment form.

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On 8/21/2022 at 1:59 PM, liverichly said:

If your employment is less than 40 hours a week but still is full time hours then it can still be considered full time employment, but most lenders will usually need at least 32+ hours worked per week.  In your situation it's not a brand new job and you have a history of working less than full time, so you're really going to need to put in some effort documenting that it is actually full time.  I'd recommend you get something in writing from your employer that confirms the hours you are working qualify you as a full time employee with full benefits, etc.  Assuming you are paid hourly (vs. a salary) lenders will need documentation of your average full time hours in order to properly calculate your income, that can be obtained by your employer completing a Verification of Employment form.


Thank you, makes sense. They just got to have some sort of verification in order to use the full 40 hours looking forward then. I’ll probably have to pick up some overtime or something to get it to 40 hours. Thanks for your help!

 

8 hours ago, centex said:

Your other option is to find another lender.  Questions like this should have been one of the first things asked.  You always want the basic rules of the game known before jumping into the water...

 

There’s a lot of different rules in this game. It’s not possible to know them all. Thanks for your help. 

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On 8/22/2022 at 4:03 PM, RandomHomeBuyer said:


Thank you, makes sense. They just got to have some sort of verification in order to use the full 40 hours looking forward then. I’ll probably have to pick up some overtime or something to get it to 40 hours. Thanks for your help!

 

When income is variable (such as hourly income that isn't exactly 40 hours each week) then an average hours from the time you begun full time employment until the lender receives the employment verification form is used to calculate your qualifying income.  So if you are working 38, 33, 35, 36, 40, 41, 40, 40 hours over the last 8 weeks then the average hours will be 37.875 multiplied by your hourly wage = weekly amount of qualifying income (x 52 weeks / 12 months) = monthly qualifying income.

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  • 3 weeks later...

Definitely find another lender.  If your credit is as solid as you say, its just finding the lender to make it work.  I switched jobs the day AFTER my lender FOUND ME! I knew the job change was coming.  Same field.  Educator.  Just had to get paperwork the underwriter could process easily. I had no clue of the timing.


Remember, the rules are the same, but lenders are free to add on THEIR individual extras.

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