Mortgage  Question?
Can You Qualify for Mortgage With Variations in Income?

Can you qualify for a mortgage with variations in your income? My paycheck changes by a small amount each pay period and I want to understand if I can still get a mortgage.

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

As long as you earn a regular income, have a two year employment history and the income differences each pay period are relatively small, you should be able to qualify for a mortgage, although depending on your type of employment and how you get paid, it may take a little extra effort.

If you are a full-time employee and receive a W-2 from your employer, then minor variations in your paychecks should not prevent you from qualifying for a mortgage. You will likely be required to provide the lender one month of pay stubs and potentially a written explanation that explains the small inconsistencies in your income, but this should not create a major issue.

If you are self-employed or work as a full-time independent contractor and receive a 1099 from the company you work for, you still should be able to qualify for a mortgage as long as you have a two year track record of earning relatively steady income. In this second scenario (self-employed or 1099 independent contractor), to account for variations in income, the lender averages your monthly gross income over the prior two years to determine what size mortgage you can afford.  The higher your average monthly gross income over the past two years, the higher the loan amount you qualify for.  Additionally, you will likely be required to provide pay stubs for at least the prior two months, 1099 forms and tax returns for the prior two years and potentially bank statements, depending on how you are paid and lender guidelines. Two years of tax documents are also required to verify any commission or bonus income you receive. We provide a comprehensive overview of the employment history requirement for a mortgage on FREEandCLEAR for you to review.

In short, you should be able to qualify for a mortgage but it may require additional documentation or a two year track record of full-time employment and relatively consistent income. Please note that your income and employment history are only two of several factor that lenders consider when you apply for a mortgage. Lenders also review your credit score, debt-to-income ratio and other borrower qualification guidelines to determine your ability to qualify for a mortgage. I would also advise you to look into an FHA mortgage as it offers more flexible qualification requirements than a conventional mortgage.

Finally, your best course of action is to contact multiple lenders to understand how they would handle your unique employment and income circumstances. You can review lenders in your area by clicking MORTGAGE RATES We advise you to contact at least five lenders as qualification guidelines vary.  One lender may say no while other lenders may be willing to work with you.

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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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