2nd Job Income for Loan Qualifying [Key Takeaways]

2nd Job Income for Loan Qualifying

Often when people are looking at buying a home, they will get a 2nd job or an additional source of income so they can qualify for more house or save a bigger down payment.  People are often disappointed when I let them know that in order for a lender to use income from that 2nd job you need a two-year history of having two jobs at the same time. It does not have to be the same 2nd job. Perhaps over the last few years you have had a few 2nd jobs.  They key that underwriters are looking for is that you have successfully maintained having two jobs at the same time. In addition, they are looking for a way to determine how much income to use from the 2nd job.  If you have a 2nd job where the hours are all over the map a two-year history give them the ability to average the income.

If your 2nd job is 1099 meaning that it will trigger you filling self-employed tax returns, they will want two years of filed taxes.  Yes, two years of filed taxes.  If you use your tax returns to write off all your income, then yes it erases the income for us as well.  Whatever you tell the IRS we take as a fact.  I say this because if I had a nickel for every person who wrote off all their income on their taxes said to me “well I make a lot more, I just don’t want to pay taxes on it.  You know the game right.??”  I would be retired.

If I am speaking with a borrower about their long-term mortgage planning I am generally trying to not use a 2nd job to qualify.  I am always trying to encourage people to use less of what they could qualify for.  The reason is that time over time the happiest borrowers I know and see are the ones who have not stretched themselves too thin.  Having the ability to quit your 2nd job and still make your mortgage payment is powerful.  There is not enough that can be said about the security of financial freedom.

Key Takeaways:

  • A 2nd job can be a great way to help save money towards a down payment and increase your overall financial stability. If you need that income to qualify for a home, you will need a two-year history. 
  • Try to qualify with just your primary job, it will lead to longer term happiness.

 

Helpful Links:

If you are self employed/gig income: https://www.youtube.com/watch?v=q_GClrlqYh0

The key to mortgage affordability: https://jenniferbeeston.com/mortgage-affordability/how-much-mortgage-can-i-afford/