Using Income From a Second Job To Get a Mortgage Loan in California

Some home buyers in California use income from a second job to help them qualify for a mortgage loan. This is a common strategy among borrowers with dual income sources.

At the same time, a lot of home buyers in California don’t even realize they can use income from a second job to get a mortgage loan. Here’s what you need to know about this common financing strategy.

Income from a Second Job to Get a Mortgage

When a person applies for a home loan in California, the bank or lender will review their financial situation to determine how much they can borrow. Among other things, they’ll consider the borrower’s income situation.

Your income, along with your current debt level, is one of the main factors that determine how much you’re able to borrow for mortgage loan.

But what if you have more than one job? Can you use the income from a second job to qualify for a mortgage loan in California? In some cases, the answer is yes. But there are some requirements and stipulations to know about.

When it comes to mortgage underwriting and approval, a second job can be classified as an additional source of income for the borrower. Your main job (the one that accounts for most of your income) will count the most toward your mortgage qualification. But a second job can be used as well, as long as certain requirements are met.

Enter the Two-Year Rule

The two-year rule is the most important requirement in these scenarios. Generally speaking, borrowers who want to use income from a second job to qualify for a mortgage loan in California must have a two-year work history with both jobs.

In other words, they must be able to demonstrate the ability to manage both jobs, simultaneously, for at least 24 months.

Additionally, the second job doesn’t necessarily have to be in the same field or career category as the primary job. The most important thing is the two-year history requirement mentioned above.

There may be exceptions to the above rule, or additional requirements for certain borrowers. The mortgage lending processes can vary from one borrower to the next, for a number of reasons. Generally speaking, however, the two-year rule applies for most borrowers who want to use income from a second job.

Your Ability to Repay Is What Matters Most

Mortgage lenders look at a variety of factors when considering borrowers for a home loan. For obvious reasons, income is one of the most important requirements to get a mortgage loan in California. But there are other considerations as well, including the borrower’s credit score, borrowing history, and debt situation.

Lenders consider the “big picture” when reviewing loan applicants. The most important thing is that you have the financial ability to repay the loan — whether that’s with one job, or two. If you happen to have a second job, you might be able to use that income to qualify for a mortgage loan. But the two-year rule mentioned above will likely apply.

Recurring debts are another important consideration for mortgage loans. Whether a borrower is using income from one job or two, it will be compared to the recurring debts through what is known as a “debt-to-income ratio.” This is a percentage that compares a person’s monthly income to their recurring monthly debts.

The rules and guidelines for debt ratios can vary depending on the type of loan being used and other factors. That being said, most lenders tend to set a maximum debt-to-income ratio somewhere around 50%. But again, it can vary depending on the details of the loan.

Need a Mortgage Loan in California?

Bridgepoint Funding is located in the San Francisco Bay Area, but we serve the entire state of California.

We are a mortgage broker type of company, which means we work with a variety of lenders. This allows us to offer a broad range of home loan products to our clients. It also gives us more flexibility for qualifying borrowers, especially when it comes to second-job scenarios.

If you are in the market for a mortgage loan in California, please contact our knowledgeable staff. We can review your financial situation, including your employment and income, to determine how much you can borrow for a home loan.