This topic contains information on income from secondary and seasonal employment, including:
The income sources discussed in this topic must be documented by obtaining the following:
the borrower’s recent paystub and IRS W-2 forms covering the most recent two-year period. (Signed federal income tax returns may also be required to verify unemployment income related to seasonal employment.)
A verbal VOE is also required from each employer. See B3-3.1-07, Verbal Verification of Employment, for specific requirements.
As these income types may be hourly or seasonal, refer to B3-3.1-01, General Income Information, for additional information on calculating variable income. Also see B3-3.1-02, Standards for Employment Documentation, for additional information about verifying employment income.
Secondary employment income is income that is derived from a second job or multiple jobs the borrower may have. The lender must verify the following.
|✓||Verification of Secondary Employment Income|
|Verification of a minimum history of two years secondary employment income is recommended. However, income that has been received for a shorter period of time (but, no less than 12 months) may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income history.|
|A borrower may have a history that includes different employers, which is acceptable as long as income has been consistently received. In no instance may the borrower have any gap in employment greater than one month in the most recent 12-month period, unless the secondary employment is considered seasonal income (subject to the requirements below).|
The lender must verify the following for seasonal income.
|✓||Verification of Seasonal Income|
|Verify the borrower has at least a two-year history of seasonal employment and income.|
|For seasonal unemployment compensation, verify that it is appropriately documented, clearly associated with seasonal layoffs, expected to recur, and reported on the borrower’s signed federal income tax returns. Otherwise, unemployment compensation cannot be used to qualify the borrower. See B3-3.1-09, Other Sources of Income, for more information on unemployment benefits.|