If you have a seasonal income, you may be wondering if you can still get a mortgage.
From weather-related work such as landscaping to part-time contract work, seasonal income comes in many forms.
The good news is that it is possible to get a mortgage with a seasonal income. With proper documentation, planning, and a flexible lender, a mortgage on a new home can be yours.
In this article, we’ll discuss what qualifies as seasonal income and how you can still get a mortgage and start shopping for the home of your dreams.
What is considered seasonal income?
Seasonal income can be defined as any sort of job or profession where the paychecks fluctuate due to seasonal aspects such as the time of year or weather.
For example, teachers, farmers, landscapers, ski instructors—anyone whose job requires shifts in working hours for up to half of the year.
When it comes to qualifying for a mortgage, a steady income is usually one of the first requirements from a lender.
Your income is one of the key factors in determining your mortgage approval and the maximum amount you can borrow.
But what if your income isn’t exactly consistent? For those with an income that fluctuates seasonally, there are solutions still available.
While this type of income may not always achieve the level of consistency, lenders look for in applications, that doesn’t mean you can’t get approved for a mortgage.
Knowing how to effectively work with your lender and provide proof that you’ll be able to manage your mortgage payments is key when applying with a seasonal income.Check your mortgage options
Can you get a mortgage with fluctuating income?
Fluctuating income can certainly create some hurdles to getting approved for a mortgage—however, there are options.
Show your consistency
A well-documented, consistent, and stable job history is key to using seasonal income for a mortgage. Lenders will evaluate this history to determine your creditworthiness for a home loan.
For seasonal income to be accepted by the mortgage underwriters, you have to provide documentation that proves a consistent job history, which shows that you’ve worked for the same employer for at least two consecutive years.
This steady history of employment provides assurance that you can afford your potential mortgage and continue to make on-time payments in the future for the length of the loan.
Use unemployment income
Keep in mind, unemployment income can also be used to apply for a mortgage if it’s used in conjunction with seasonal income. This is common for many seasonal workers, as they are considered unemployed in the off months.
This type of supplemental income has to be well documented and consistent with the off-season of the employment that you’re putting on your mortgage application.
Save for a down payment
Other factors can help make up for stable employment, such as saving up to put down a larger down payment or to balance out the ability to take out a smaller mortgage.
A mortgage payment calculator can help you narrow down exactly how much home you can afford.Need help finding a lender?
What kind of documentation is needed to apply for a mortgage?
The proper documentation can make or break your mortgage application.
Lenders need to see that you’re creditworthy and a good candidate to eventually pay off the mortgage loan.
The first step is to gather all your tax documents from the past few years. This is an essential part of proving your track record and steadiness of income, which is the first thing lenders will evaluate when considering your mortgage application.
It’s important to have your last two years of W-2 forms, tax returns, and pay stubs or bank statements. This will show the underwriter a steady history of income and employment.
Verification of employment
The next step in preparing to apply for a mortgage with a seasonal income is to get a letter from your employer detailing the specifics of your income.
This letter should include details such as the dates of your employment, the amount you’ll be paid, and any bonuses or commissions you might receive. It should also explain any gaps in your employment if you’ve had any unpaid leave throughout the year.
Documentation is also necessary to show that your employer will hire you again the following year. Mortgage lenders want to be sure you can afford your monthly payments for the length of the loan, so showing longevity at your place of employment is crucial.
Strong credit history
Make sure that your credit is strong when you apply for a mortgage. This will not only affect your approval but the interest rates that you’re offered.
Your lender will pull your credit report to determine your debt-to-income ratio. The lower your debt and higher your credit, the better chance you have of qualifying for a mortgage with favorable terms.
Manage documents efficiently
Gathering and submitting this documentation in a timely manner is important to keep the process moving smoothly. You don’t want to delay your mortgage approval by failing to turn in documents on time.
This information is important for lenders to accurately assess how much of a financial risk it may be for them to approve your loan.
Get an experienced lender on your side
An experienced mortgage lender can guide you through this process and help ensure that you successfully obtain a mortgage with a seasonal income. They should be willing to work with your financial situation and offer you the best options.
The key is to search for a lender that has experience and success with working with seasonal income applicants.
The experienced and trustworthy team at GO Mortgage will be happy to answer all of your questions and find the best loan product for you.
Contact us today!
Getting a mortgage with a seasonal income may require more effort, but it’s worth it at the end when you can start building equity in your new home.