Navigating Mortgages for Union Workers

A Complete Guide for Short-Term Contract Employees

Union workers are the backbone of many essential industries – from construction and manufacturing to healthcare and public service. While union membership offers incredible benefits like job security, structured wage increases, and comprehensive benefits packages, it can also create unique challenges when applying for a mortgage, especially for workers on short-term contracts.

Understanding Union Employment Structures

Not all union workers face the same mortgage qualification challenges. Teachers, government employees, and long-term workers with stable employers typically follow standard mortgage guidelines. However, workers who take on short-term contracts through union hiring halls – often called “Hall Assignments” or “Dispatch Assignments” – face a more complex qualification process.

These temporary assignments can range from just a few days to several months, with workers moving between different employers as projects begin and end. While this structure provides flexibility and often higher wages, lenders need to carefully analyze income patterns to ensure stability and continuity.

Types of Union Income

Union workers typically receive various types of compensation that require careful consideration:

Hourly Wages: Most union workers earn hourly wages established through collective bargaining agreements. These rates are often higher than non-union positions and may vary based on skill level, geographic location, and apprentice-to-journeyman progression.

Overtime and Premium Pay: Union contracts typically outline overtime rates (often 1.5x or 2x regular pay) for hours exceeding 40 per week, plus premium pay for holidays, weekends, or night shifts. This can significantly boost income but may vary seasonally or between projects.

Per Diem and Allowances: Many union positions include allowances for automobiles, uniforms, tools, meals, or housing. However, these require careful analysis to determine whether they’re true reimbursements for expenses or additional income that can be counted toward mortgage qualification.

Unemployment Compensation: During “non-contract” seasons, union workers may qualify for unemployment benefits. When received consistently over a two-year period, agencies allow this as supplemental income in qualification calculations.

Income Calculation Challenges

The key challenge with short-term union contracts is demonstrating income stability. Lenders typically require a two-year history of variable income to establish patterns and predictability. This means reviewing:

• Total income from all assignments over the past two years
• Current year-to-date income compared to historical averages
• Seasonal patterns and employment cycles
• Projected income for the remainder of the current work cycle

Most agencies require averaging union workers’ income over a full two-year period to account for both active and inactive seasons. Simply looking at current year-to-date income can be misleading if the worker is in an active contract period.

Agency Guidelines and Requirements

Different loan programs have varying requirements for union worker income:

• Conventional loans (Fannie Mae/Freddie Mac) focus on income stability and likelihood of continuance
• FHA loans prefer a minimum two-year history for overtime and variable income
• VA loans offer flexibility in analyzing per diem income that exceeds actual expenses
• USDA loans require specific documentation periods for expense allowances and per diem income

Documentation is Key

Success in qualifying union workers requires thorough documentation:

• Union contracts showing wage scales and terms
• Pay stubs from all assignments over the past two years
• Tax returns demonstrating total annual income
• Employment verification letters from the union
• Documentation of any unemployment compensation received

Working with Union Borrowers

When working with union clients, it’s essential to understand their specific industry patterns, contract structures, and income cycles. Each case requires individual analysis, and conservative income calculations often provide the most reliable qualification approach.

Union workers bring valuable skills and often higher wages to the mortgage market. With proper documentation and understanding of agency guidelines, these borrowers can successfully achieve homeownership while maintaining their flexible, project-based careers.

The key is working with experienced mortgage professionals who understand the nuances of union employment and can navigate the complex income calculation requirements that ensure both borrower success and regulatory compliance.