Mortgage  Question?
Can You Use Overtime Income to Qualify for a Mortgage?

Can you use overtime income to qualify for a mortgage?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

As long as you have at least a two year history of earning overtime income and the income is expected to continue in the future, then you can use overtime to qualify for a mortgage.

Only a one year track record of overtime income may be required for applicants with steady incomes, a low debt-to-income ratio, a high credit score, a high down payment and significant financial reserves. If you recently changed jobs and just started earning overtime, then lenders usually require a two year work history in your new job to factor in your overtime although you should be eligible to qualify for a mortgage based on your earnings from your regular salary or wages.

To include overtime income in your mortgage application, you are usually required to provide your tax returns and W-2s for the prior one-to-two years and pay stubs for the prior two months to verify your income. Your tax returns and W-2s show your total annual income while your recent pay stubs show your current monthly gross income and also usually separate regular income from overtime earnings. Additionally, you may be required to provide a letter from your employer stating that your overtime earnings are expected to remain steady going forward.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the loan you can afford with overtime income

If your tax returns and pay stubs show that your overtime income is inconsistent or declining, then lenders may average the income over the past one-to-year years, discount the income or exclude it altogether. If these documents show a consistent level of monthly and annual overtime earnings, then lenders are likely to include the extra income in your debt-to-income ratio.

In short, the higher your monthly gross income, the higher the mortgage amount you qualify for. Additionally, the more steady and permanent your income -- whether it is from regular work hours or overtime -- the better it is when you apply for a mortgage.

Mortgage qualification requirements including the use of overtime income vary by lender and loan program. We recommend that you contact multiple lenders in the table below to confirm the loan you can afford based on your income and other factors. Shopping lenders is also the best way to save money on your mortgage

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.


"B3-3.1-01, Verification of Base Pay, Bonus, and Overtime Income."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, August 7 2019.  Web.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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