For standard mortgage programs, if you can demonstrate that you have consistently earned overtime income for the prior two years then the lender should include it as income in determining your debt-to-income ratio and what size mortgage you can afford. To verify your income, both overtime and salary / hourly wages, lenders typically request that you provide two years of tax returns and W-2 forms as well as recent pay stubs or payroll statements. Your tax returns and W-2 forms show your total annual gross income while the recent pay stubs or payroll statements show your current monthly income and also usually separate regular income from overtime income. If these documents show a consistent level of monthly, annual and overtime income over the past two years then most lenders use your overtime income in determining what size mortgage you qualify for, especially if you have worked at the same company for 10 years. Please note that in addition to debt-to-income ratios, lenders use a number of borrower qualification guidelines, including your credit score, to evaluate your loan application.
Additionally, while most lenders require two years of overtime income history for standard mortgage programs, some low and no down payment mortgage programs only require one year of history and potentially less. We provide a comprehensive summary of low / no down payment mortgage programs on FREEandCLEAR as well as a helpful comparison of these programs.
In your case, we recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact three-to-four lenders as borrower qualification guidelines can vary. You may need to contact several lenders but you should be able to find one that permits the use of your overtime income in determining your ability to qualify for a mortgage.