Home > Mortgages > When a Second Job Won’t Help You Buy a Home

Comments 0 Comments

You have a great credit score, manageable debts, solid income, cash ready to go, but you still can’t get a mortgage. You even have a second job – shouldn’t that help you?  Not necessarily. A lender may not allow the use of the income you generate from your second job unless you meet certain criteria. If you want a lender to count your second-job income, you need to know these lending stipulations.

How Lenders Classify Second-Job Income

A second job is usually classified as an additional income when qualifying a consumer for a mortgage. A lender will give the most importance to the consumer’s main job, as that is considered to be the anchor income in determining financial stability.

The facts about using a secondary income source:

  • Cannot be used if the second job is brand-new, even if it is in the same field. Let’s say, for example, you’re a nurse at one particular hospital. In the past four months you’ve taken on a second job as a nurse for a separate hospital and you generate an additional $2,000 per month in income at the second job – but you have no history of having a second job before. Even though it’s in the same field, it will not be counted.
  • Can be counted so long as there is a history of working a second job.
  • Can be counted with two-year work history demonstrating an ability to manage two jobs side-by-side for the past 24 months.
  • Need not be in the same field, the 24-month history supersedes any ‘same field’ requirement.
  • Cannot have any job gaps within the past 24 months of more than 30 days. A job gap will cause the lender to have to average your income.

The Two-Year History Threshold

Lenders are particularly interested in answering any credit-related questions when it comes time for a final underwriting decision. The underwriter’s sole focus, as the decision-maker, is mitigating risk for the lender, and as such, they are the final signoff person in being able to use your second job income when you apply for a mortgage. The two-year history requirement is in place to prevent any possible question of fraud or misrepresentations or getting a job solely for the purposes of qualifying. If the consumer has a two-year work history and has demonstrated an ability to maintain a second job for the past 24 months, this reduces the possible risk of this income going away in the future.

The Same-Field Threshold

Taking the nurse example we used, it’s customary within the health care profession for a registered nurse to work full-time simultaneously at two separate hospitals, part of the week at one hospital, part of the week at the other hospital. If, however, this arrangement has gone on for less than 24 months, the additional income cannot be counted. If it has been 24 months or longer, the income can be counted. Whether it’s in the same field does not matter, so long as the secondary job source shows the pattern of manageability.

What Happens With a Job Gap

If the jobs you’ve held in the previous 24 months have job gaps longer than 30 days and the jobs are hourly, your income will be averaged over the most recent 24 months. Let’s say you’ve had a $15-an-hour part-time job for the past 16 months, but for the most recent three months, your new hourly rate of pay at your new job is $20 per hour. The lender will still average the income and will not take into consideration your new higher hourly rate of pay, as the hourly is considered inconsistent due to the five-month gap. Should a salaried position arise after the job gap, however, the full wages would be considered without averaging.

More on Mortgages and Homebuying:

Image: RTimages

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team