Why hourly wage earners sometimes have a hard time getting a home loan

You’re all excited to purchase your first home, you have a good job, you have a good down payment, and you’ve got a good credit score. What could go wrong, right? Here’s an occurrence that happens pretty frequently you might not know about and more specifically what to do about it as it relates to getting a home loan…

If you’re an hourly wage earner, and you work a full-time 40-hour work week with your employer, this income generally will help you. If you were previously part-time and now you’re full-time, that is OK. If however, you were full-time and now you’re part-time this is going to be problematic even if your hourly wage is more. The part-time income will be used to get you qualified so long as you have a twelve-month history, even more challenging, this income must be averaged.  This is where people can get into trouble. For example, let’s do you say you did a preapproval and you qualified for a $700,000 house five months ago. Now you’re getting pre-qualified to purchase a home to get your preapproval updated, and you’re still working full-time hours, but you’re technically now an elective part-time employee meeting you can choose to work 40 hours a week or you could choose to work less than 40 hours a week, this will be most likely an issue.

This is where people say well wait, “I’m a full-time employee”, but you’re not because you have the ability to choose for less so in other words in order to be a full-time employee a full-fledged, full-time employment signed off with the HR within the organization you’re employed for is the benchmark. Alternatively, the income would have to be averaged particularly if you’re working 40 hours one week and 20 hours another week and 30 hours another week for example, and so on. Per diem, work also needs to be average as well. If you are employed through a temp agency, temp agency income can be used but you have to be working full-time and have a history of 12 months. Without that history, that income cannot be used at all, unless you became a bona fide full-time employee.

So if you have full-time employment with an hourly wage that income can be qualified. If not, it doesn’t mean you can’t qualify for the house it does, however, mean the income might have to be averaged which might impact your ability to buy the size of a home you want or put down more cash, change, loan programs or pay off debt to qualify or possibly get a cosigner if you’re purchasing power gets impacted.

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