Tips and Bonuses and Overtime, Oh My!

Working with several waitresses and nurses lately prompted this new post.  If you’re in a line of work where tips, bonuses, or overtime makes up a portion of your income, here’s what you need to know: 

  • You must be able to show a two year history of tips, bonuses, and/or overtime to be able to use that income to qualify to for a mortgage loan.  Lenders will want to see your W-2s and tax returns for the most recent two years as proof.
  •  Your employer must verify that this income is likely to continue by writing a letter on company letterhead and/or completing a Verification of Employment
  • Tip income must be averaged over the past two years. 

If you have not been receiving one of these types of income for at least two years, but you also receive a base salary, you can still qualify for a mortgage loan—you just won’t be able to purchase as much house. 

You should touch base with a loan officer six months to a year before you begin house hunting for an accurate calculation of your gross monthly income.  You should also be sure to stay on your employer’s good side so that when the time comes to buy a home, he or she will complete the Verification of Employment in your favor.  If you’re on the chopping block, chances are your employer is not going to verify that your bonus and/or overtime income is likely to continue.


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