Understanding Part-Time and Secondary Income in Mortgage Qualification

When applying for a mortgage, one common question is whether income from part-time jobs or secondary employment can be used to qualify. The answer is yes, but specific criteria must be met. Understanding how lenders evaluate part-time and secondary income can help ensure a smoother mortgage process.

Defining Part-Time and Secondary Income

Part-time income comes from employment with fewer hours than a full-time schedule, often less than 30–35 hours a week. Secondary income refers to an additional job that supplements the primary source of income. Both are considered variable and must show consistency and stability to be included in qualifying income.

Required Documentation

To include part-time or secondary income in a mortgage application, borrowers need to provide clear documentation:

• Recent pay stubs showing year-to-date income from the secondary job
• W-2s covering the last two years
• Verification of Employment (VOE) confirming the history and likely continuation of the part-time or secondary work

Two-Year History and Stability

Generally, lenders want to see a two-year history of part-time or secondary income to ensure it is stable and likely to continue. If the borrower has worked multiple part-time jobs or maintained a secondary job alongside their primary job for this period, the income is more likely to be considered reliable.

If the job has been held for less than two years, underwriters may still count the income, especially if it’s related to the borrower’s primary profession or if the borrower has a history of holding similar jobs.

Income Averaging and Declining Trends

Lenders will average the income over the last two years or the actual time received if it’s less than two years. For example, if the borrower earned $7,500 in year one and $9,000 in year two from part-time work, the average is $8,250 per year, or about $687.50 per month.

If the most recent income is significantly lower than prior years, this may indicate a declining trend, and the income may be excluded or reduced in qualifying calculations.

Job Consistency and Multiple Employers

Borrowers with multiple part-time jobs must show that the combined income is steady and ongoing. Changing jobs frequently or large gaps in employment can undermine the case for using secondary income.

The nature of the part-time job also matters. Lenders prefer positions with predictable hours and schedules. Gig work or seasonal jobs are typically scrutinized more closely unless there’s a clear and consistent pattern.

Employer Confirmation of Continuity

A critical aspect of qualifying part-time income is the employer’s confirmation that the job, and income, is expected to continue. If the employer marks the income as temporary, seasonal, or uncertain, underwriters may disregard it entirely.

Loan Program Variations

Conventional, FHA, and VA loan programs generally follow the same framework for part-time income: demonstrate history, stability, and likelihood of continuance. However, the documentation specifics and tolerance for exceptions can vary slightly by program.

Bottom Line

Part-time and secondary income can contribute meaningfully to qualifying for a mortgage, but only if it’s stable, documented, and expected to continue. Borrowers who maintain consistent work histories and gather thorough documentation improve their chances of having this income counted in the mortgage process.