When it comes to getting a mortgage, how much you earn matters — but so does how you earn it. A W-2 salary looks very different to an underwriter than an hourly wage, a part-time paycheck, or income from a second job. And if you’ve recently started a new position or are expecting a pay increase, there are specific guidelines that govern whether that income can even be used to qualify.
Let’s break it all down.
Salaried Income
Note: Fannie Mae significantly updated its Income Assessment guidelines in March 2026 (effective June 1, 2026). Several of the rules below reflect those current standards.
If you’re a salaried employee with a consistent annual pay rate, qualifying your income is usually the most straightforward of all employment types. Under current Fannie Mae guidelines, salary falls into the category of fixed base income — meaning a set pay rate that doesn’t depend on hours worked. Lenders will typically verify your salary using:
- A written Verification of Employment (VOE) from your employer
- Recent pay stubs (usually covering the most recent 30 days)
- W-2s from the prior two years
- Federal tax returns (required in some scenarios)
Your qualifying income is simply your annual salary divided by 12. If you earn $90,000 per year, your monthly qualifying income is $7,500 — straightforward math.
One meaningful update from Fannie Mae’s 2026 guidelines: for fixed base income (salary or guaranteed hourly), there is no minimum employment history required for the income to qualify. What matters is that your current income is consistent with your year-to-date earnings. This is a significant shift from older guidance that implied two years in the same role was necessary.
That said, lenders still look at your overall employment history for context — gaps, recent industry changes, or a pattern of job-hopping can raise questions even if the current income checks out. A logical career progression — such as a promotion, a lateral move within the same field, or a shift from hourly to salaried in the same industry — is generally acceptable.
New Job, Same Field
Starting a new salaried position shortly before applying for a mortgage? That’s not automatically a dealbreaker. If you’ve started your new job before the application date, lenders can typically use that income. They’ll want documentation — an offer letter, pay stubs if available, and confirmation of start date — but a new job in the same field with equal or greater pay is usually workable.
Hourly Income: Fixed vs. Variable Makes All the Difference
Hourly income introduces more complexity because it may or may not be tied to a consistent number of hours. Fannie Mae’s updated 2026 guidelines formalize a distinction that underwriters have always applied in practice:
- Fixed hourly income — a set hourly rate with a guaranteed minimum number of hours. Minor variances from pay period to pay period don’t disqualify the income from being treated as fixed. This is treated similarly to salary, with no minimum history requirement.
- Variable hourly income — a fixed hourly rate with fluctuating hours, or an hourly rate that itself varies. This requires a minimum 12-month history and is averaged over time rather than taken at face value.
If your hours are consistent and guaranteed, the calculation is simple: hourly rate × average weekly hours × 52 weeks ÷ 12 months. If you earn $35/hour and consistently work 40 hours per week with a guaranteed schedule, your qualifying income is:
$35 × 40 × 52 ÷ 12 = $6,066.67/month
If your hours vary — say you work between 32 and 45 hours per week — your income is treated as variable. Lenders will average your hours over at least the most recent 12 months (Fannie Mae allows averaging using current hourly rate × average monthly hours) rather than using a peak or assumed figure. Under the current guidelines, lenders can use either an average income method (year-to-date plus prior year) or an average hours method (average monthly hours × current rate), with a minimum of 12 months of history required either way.
One important nuance for variable hourly workers: any future pay raises must be in place before closing to be used in qualifying. The ability to use a future pay rate — which exists in limited circumstances for fixed/salaried income — does not apply to variable hourly income under Fannie Mae guidelines.
Overtime and Shift Differentials
Overtime pay and shift differentials can be counted — but lenders typically require a two-year history of receiving that additional pay and an expectation that it will continue. Your employer may need to confirm that overtime or shift differential is likely to continue. One strong year of overtime won’t automatically qualify; lenders want to see consistency.
New Freddie Mac Guidelines: Hourly Income Starting After the Note Date
Freddie Mac recently updated its guidelines around income that begins after the Note Date (the date your loan closes). This matters if you’re closing on a home while transitioning to a new job or a new pay rate. Here’s what changed:
New Employer, Hourly Wage
Hourly earnings from a new employer may now be used to qualify — provided there is a guaranteed minimum number of weekly hours documented in the offer letter or employment contract. The key word is “guaranteed.” If hours are variable or at-will, that income cannot be used. The employer needs to commit to a specific minimum, not just describe a typical schedule.
Current Employer with a Future Pay Increase
If you’re staying with your current employer but getting a raise that takes effect after closing, Freddie Mac will allow the new (higher) rate to be used to qualify — but only when documentation in the mortgage file demonstrates that both current and future hours do not fluctuate. You can’t use a future pay rate if your hours vary, even if the rate itself is locked in.
Funds Verification Requirement — Removed
Previously, when there were more than 15 calendar days between the Note Date and the start of new employment, lenders were required to verify additional funds beyond standard closing costs and reserves. Freddie Mac has removed that requirement when income documentation is obtained after the Note Date but before the Delivery Date (when the loan is delivered to Freddie Mac). This is a meaningful simplification for borrowers starting new jobs shortly after closing.
10-Day Pre-Closing Verification Now Required for All
When income documentation is obtained after the Note Date, Freddie Mac now requires a 10-day pre-closing verification (PCV) for all mortgages — no exceptions. This verification confirms employment status is still active before the loan closes.
The Bottom Line on Post-Note-Date Income
Freddie Mac is explicit: income commencing after the Note Date must always be non-fluctuating employment earnings. Variable income, commission, or anything that isn’t a predictable fixed or guaranteed hourly amount does not qualify under these rules.
Part-Time Income: Yes, It Can Count
Part-time income is often misunderstood. Many borrowers assume that working part-time disqualifies them from a mortgage — that’s not true. What lenders care about is whether the income is fixed or variable, and whether it’s likely to continue.
If your part-time job pays a guaranteed hourly rate with guaranteed minimum hours, it may qualify as fixed base income — and under Fannie Mae’s current guidelines, there’s no minimum history requirement for fixed income to qualify. If your hours fluctuate, it’s treated as variable income, which requires at least a 12-month history of receipt.
In practice, lenders will also want to see:
- Evidence that the income is likely to continue
- Documentation showing your pay rate and hours (pay stubs, W-2s, VOE)
- Year-to-date earnings consistent with the qualifying amount
If you picked up a part-time job just a few months ago with variable hours, lenders will likely hold off counting it until there’s enough history to average. If it’s a fixed schedule with guaranteed pay, the story is different — and worth discussing with your loan officer early.
Part-time income from a second job (see below) follows similar rules, but there are a few distinct considerations.
Second Job Income
Some borrowers work two jobs — a primary full-time position and a secondary part-time or flex role. Good news: both can count toward qualifying income, but the second job typically needs to meet the same two-year history requirement.
Things lenders look for with second job income:
- Two-year history at the second job (or in some cases, a one-year history with strong documentation and a longer record in a similar role)
- Confirmation that working two jobs has not negatively impacted primary employment
- Consistency — sporadic or seasonal second-job income is treated more cautiously
If you recently started a second job to boost your qualifying income before applying for a mortgage, that strategy may not pay off immediately. Lenders may require that income to season for a year or two before it can be included.
Variable Income: The Nuanced Category
Variable income includes anything beyond a fixed base wage or salary — hourly income with fluctuating hours, tips, commissions, seasonal work, and so on. The defining characteristic is that the amount changes period to period.
Under Fannie Mae’s current 2026 guidelines, variable income requires a minimum 12-month history of receipt (updated from older guidance that commonly cited 24 months). Lenders calculate qualifying income by averaging — using year-to-date earnings and the prior year, with at least 12 months’ worth of data.
How the trend affects your qualifying income:
- If income is stable or increasing, lenders calculate an average using year-to-date plus the prior year’s earnings — minimum 12 months of history required.
- If income is declining, lenders must first confirm the income has stabilized. If it hasn’t, the income is not eligible for qualifying at all. If it has stabilized, lenders use year-to-date income divided by months elapsed in the current year — not a historical average that would inflate the number.
- Gaps in variable income — like a period away from work followed by a return — may allow lenders to exclude that gap period from the calculation if the event was documented as non-recurring and outside the borrower’s control.
The bottom line: declining variable income is a red flag that lenders take seriously. If your commissions, tips, or variable hours have been dropping, don’t assume lenders will average around it.
How Loan Type Affects Income Qualifying
The guidelines above apply broadly, but the specific loan program you’re using can affect the details:
Conventional Loans (Fannie Mae / Freddie Mac)
Most of the rules described in this post apply to conventional financing. Both agencies publish detailed guides that lenders must follow. Notably, Fannie Mae updated its entire Income Assessment chapter in March 2026 — effective June 1, 2026 — introducing clearer definitions for fixed vs. variable income, updating history requirements, and reorganizing how income is calculated and documented. Freddie Mac’s recent hourly income updates for post-Note-Date employment (described above) are specific to its program. If your lender references older income guidelines, it’s worth asking whether they’ve updated their overlays to reflect the current guides.
FHA Loans
FHA has its own income guidelines published in the FHA Single Family Housing Policy Handbook. In many cases, FHA is similar to conventional guidelines — two-year history, averaging of variable income — but there are some differences, particularly around part-time income and gaps in employment. FHA can be more flexible in certain scenarios, such as borrowers returning to work after a medical leave.
VA Loans
VA guidelines tend to be more flexible than conventional in some areas. VA uses a concept called “residual income” in addition to debt-to-income ratio, which can work in a borrower’s favor. Part-time and second-job income can often be used with less seasoning if the borrower has a strong overall profile.
USDA Loans
USDA loans are available in eligible rural areas and have income limits in addition to income documentation requirements. They generally follow similar standards to conventional financing for employment income.
Tips for Borrowers with Complex Income
If your income situation is anything other than straightforward salaried employment, here’s practical advice:
- Talk to a lender early. Before you start house hunting, have a thorough conversation about your income sources. Getting pre-underwritten — not just prequalified — means your income documentation has actually been reviewed, not just estimated.
- Keep clean records. Two years of tax returns and W-2s are often required. Make sure you’ve filed on time and that your returns accurately reflect your income.
- Don’t change jobs right before closing. Lenders verify employment multiple times during the loan process, including shortly before closing. A job change — even a positive one — can delay or derail a closing if it’s not handled carefully.
- Document everything about new employment. If you’re starting a new job around the time of your purchase, get your offer letter, confirm your start date in writing, and work with your loan officer to understand exactly what documentation will be needed and when.
- Understand what lenders see vs. what you experience. Your gross income before taxes and deductions is what lenders use — not your take-home pay. But your tax returns are also reviewed, so significant write-offs that reduce taxable income can affect qualifying, especially for self-employed borrowers.
The Bottom Line
Income qualifying isn’t one-size-fits-all. Whether you’re a salaried employee, an hourly worker, someone juggling two jobs, or earning variable income from a range of sources — there’s a path to mortgage qualifying, but the documentation requirements and calculations vary by income type and loan program.
2026 has brought meaningful guideline updates from both Fannie Mae and Freddie Mac. Fannie Mae’s March 2026 overhaul clarifies the fixed vs. variable income distinction, updates variable income history requirements to a 12-month minimum, and tightens the rules around declining income. Freddie Mac’s recent hourly income updates help borrowers navigating job transitions around closing time — including removing the extra funds verification requirement that previously applied. These aren’t small technical tweaks. They affect real borrowers, real qualifying scenarios, and in some cases open doors that were previously closed.
Have questions about how your specific income situation will be viewed by an underwriter? I’d love to help. Reach out here or give me a call — this is exactly the kind of conversation I have with borrowers every day, and I’d rather talk through it early than have surprises later.
This post is part of a series on how lenders treat different types of income. Also see: How Bonus Income Is Qualified for a Mortgage and How RSU Income Is Qualified for a Mortgage.
Frequently Asked Questions
Does my salary income require a minimum employment history to qualify for a mortgage?
Under Fannie Mae’s updated 2026 guidelines, fixed base income — including salary and guaranteed hourly wages — has no minimum history requirement. What matters is that your current income is consistent with your year-to-date earnings. However, overall employment history is still reviewed for context, and gaps or frequent job changes can still raise underwriter questions.
How do lenders calculate qualifying income for hourly workers?
It depends on whether your hours are fixed or variable. If you have a guaranteed minimum number of hours, lenders use: hourly rate × weekly hours × 52 ÷ 12 to get your monthly qualifying income. If your hours fluctuate, your income is treated as variable and averaged over at least the most recent 12 months of history.
Can part-time income be used to qualify for a mortgage?
Yes. If your part-time job has a fixed schedule with guaranteed hours, it may qualify as fixed base income with no minimum history requirement. If your hours vary, it’s treated as variable income and requires at least a 12-month history. The key is whether the income is consistent and likely to continue — not the number of hours per week.
How long do I need to have a second job before it counts toward mortgage qualifying?
Second job income generally needs a two-year history to be used for qualifying under conventional guidelines. In some cases, a one-year history may be acceptable with strong documentation. If you recently added a second job specifically to boost your qualifying income, lenders will likely need to see that income season before counting it.
What happens if my variable income has been declining?
Declining variable income is treated seriously under current Fannie Mae guidelines. Lenders must first confirm that the income has stabilized. If it hasn’t, the income cannot be used for qualifying at all. If it has stabilized, lenders use year-to-date income divided by months elapsed — not a historical average. Be prepared to explain the decline and demonstrate that it has leveled off.
Can I use income from a new job that starts after my closing date?
Under Freddie Mac’s updated guidelines, yes — in limited circumstances. Hourly income from a new employer starting after the Note Date can be used if the offer letter or contract guarantees a minimum number of weekly hours. The income must be non-fluctuating. A 10-day pre-closing verification of employment is now required for all loans where income documentation is obtained after the Note Date.
What changed in Fannie Mae’s 2026 income guidelines?
Fannie Mae overhauled its entire Income Assessment chapter in March 2026, with a compliance deadline of June 1, 2026. Key changes include formal definitions for fixed vs. variable base income, a reduced minimum history requirement for variable income (now 12 months, down from a commonly applied 24), updated rules for declining income scenarios, and a clearer structure for how income continuance is evaluated.
Does overtime count as qualifying income for a mortgage?
Overtime can count, but it’s treated as variable income — not fixed base pay. Lenders typically require a 12-month history of receiving overtime and confirmation that it is likely to continue. One strong year of overtime earnings is generally not enough on its own; consistency over time is what matters.
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