When you live and work in Michigan, it’s common to have income that fluctuates, whether due to seasonal industries, changing shifts, overtime, bonuses, or multiple employers.
FHA has very specific rules for borrowers with fluctuating or variable income, and understanding these guidelines is essential for a smooth approval process. Here’s what Michigan borrowers need to know before applying.
Six Months at Your Current Michigan Employer Is Required
Under FHA rules, a variable-income borrower must be employed with their current employer for a minimum of six months as of the case number assignment date, not the application date.
This is an important distinction.
Many Michigan borrowers, especially in industries like manufacturing, healthcare, transportation, and retail, frequently change shifts or departments. FHA requires stability at the current employer before variable income can even be considered for qualification.
Three Job Changes in 12 Months Require Manual Underwriting
If a Michigan borrower has had three different jobs in the past 12 months, the loan must be manually underwritten and not rely on the FHA automatic underwriting system.
This typically means:
- Stricter debt-to-income (DTI) ratio requirements
- Additional reserve requirements
- A deeper review of employment patterns and income stability
Less Than 12 Months of Variable Income? It Cannot Be Used
If the borrower has less than 12 months of variable-income history, FHA will NOT allow that income to be used for qualification.
This affects many Michigan industries where seasonal patterns are common, tourism, construction, hospitality, and agricultural work often have periods of lower or fluctuating hours.
If the income isn’t consistent for at least a year, FHA considers it too unpredictable.
A Two-Year Average Is Required in Most Cases
For most Michigan borrowers with variable income, FHA requires a two-year average of the income to determine qualifying monthly income.
This applies to:
- Overtime
- Bonus income
- Shift differentials
- Commission
- Tip income
- Seasonal or fluctuating hours
A longer history helps FHA determine true income stability.
The Only Exception: A Verified Hourly Pay Raise
There is one FHA exception that benefits Michigan workers:
If you received a pay raise and your hourly rate increased, the lender can use a 12-month average rather than a 2-year average.
This exception recognizes that many Michigan employers offer incremental raises or union-negotiated wage increases. As long as the raise is documented, the income calculation can be adjusted accordingly.
We specialize in helping Michigan homebuyers navigate FHA’s variable income rules so there are no surprises during underwriting. If your income fluctuates, don’t guess; let our team evaluate your employment history and determine the best way to structure your loan.
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- Non-QM
- Bank Statement Loans
- DSCR Investor Loans
- Michigan First-Time Homebuyer Programs
- And more
Contact us and let us calculate your income the right way.
