Your employment status means more to a lender than you may think. Your status is a strong indicator of your employer’s commitment to your continued employment. There are many differences when it comes to variable income and part-time work for getting approved for a mortgage.
In this blog post, I’ll explain what both of them mean, what the lenders want to see and what I need to help you gain a mortgage.
Part-time income could be casual work, picking up as many hours as you can as a healthcare worker. Or, it could be minimal hours or a guaranteed amount of hours less than full time.
For part-time workers who are not guaranteed a minimum amount of hours, banks will normally want a minimum of two years at your job. This allows them to average the income you receive. If you receive a full-time position within those two years and are not on probation, we can use that income even if you haven’t been there for two years. If you’re on probation, we’ll have to wait until you’ve passed that to use that income.
Part-time income may be used if you’re at a job where you are guaranteed a certain amount of hours. Say, for example, you’re given 30 hours a week at $20 an hour. We can use this income once you aren’t on probation. Any hours above that 30 hours wouldn’t be able to be used unless there’s a two-year history of the additional hours.
Variable income could be classified as part-time, but we’re focusing on incomes such as sales, bonuses and employee income here.
If your income is truly variable and there is no guaranteed portion from your employer then we would need a two-year history. However, if you have a guaranteed portion such as $30,000 a year plus commission or bonuses, we can use the $30,000 before you hit your two-year mark.
This is the same for most variable incomes as there is no job guarantee. So, it’s best to plan in advance and have a two-year history with your company.
Most employers will want to use your two-year average including your most recent guaranteed portion, but some may consider adding your bonuses or commissions on top of your current salary. This can sometimes work out better than just doing the average for the most recent two years.
People often contact me who are salespeople and question whether or not they can easily get a mortgage with their variable income. The same goes for employees who receive regular bonuses. These incomes are a way of life that allows people to make a good living. The lending rules are just a bit more strict. But, with the right employment history, good credit and all the right documents, getting a mortgage with part-time or variable employment is possible.
Reach out to start the process.
The sooner you reach out to me the better when it comes to part-time and variable employment mortgages. You’ll need to get documents from your employer and we’ll have to work together on getting the other documents for the bank’s approval.
To get started, here are two things I will be asking you for:
- Tax returns or T4’s for the last two years
- Letter of employment on company letterhead with the start date and income
To get started today on getting a mortgage with part-time or variable income, fill out my online pre-approval application and we’ll be in touch soon.