Requirements

Can I use overtime, bonus, commission, or part-time income for FHA?

Short answer

Often yes, with a documented two-year history and likelihood-to-continue. Overtime, bonus, commission, and part-time income are typically averaged over the most recent two years (sometimes 24 months of pay stubs plus W-2s). Year-to-date trend and any decline get scrutinized. Lender overlays vary on how much to count.

Plain-English explanation

FHA accepts variable income when it's stable and documentable. Standard documentation: two years of W-2s showing the income, current pay stubs reflecting year-to-date, and a verification of employment confirming the income type and continuance. Declining year-over-year trends usually mean the lender uses the lower number, not the average. Bonus income paid annually needs two full years of bonus history. Commission-only income gets the strictest treatment — the lender often nets out unreimbursed business expenses. Part-time income at the same employer with a stable history is commonly accepted; new part-time at a second job has a tougher path. Subject to FHA/HUD guidelines and lender overlays.

Practical example

A buyer earning $60k base plus $20k average annual bonus (consistent across both prior years) typically qualifies on $80k. A buyer with $20k in year-1 bonus and $10k year-2 bonus usually qualifies on the lower year, not the average — the trend is declining.