B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
This part discusses money earned from a second job, multiple jobs, or work that changes with the seasons. It covers three main parts: how to show proof of this income, how to confirm income from a second job or multiple jobs, and how to confirm seasonal income.
Documentation Requirements
To prove income from a second job, multiple jobs, or seasonal work, you’ll need specific documents. You must provide either a completed Request for Verification of Employment (Form 1005) or your recent paystub and IRS W-2 forms for the last two years. If you receive unemployment income related to seasonal employment, you might also need to provide signed federal income tax returns.
Also, you’ll need a verbal Verification of Employment (VOE) from each job. For more details on this, see B3-3.1-07, Verbal Verification of Employment.
Since these types of income might change hourly or seasonally, check B3-3.1-01, General Income Information, for more help with calculating variable income. And see B3-3.1-02, Standards for Employment Documentation, for more on verifying employment income.
Verification of Secondary Employment Income
If you have a second job or multiple jobs, that’s what we call secondary employment income. Here’s how your lender will verify this income.
First, it’s recommended that you have at least two years of income history from your second job(s). But, if you’ve been earning this income for at least 12 months (but less than two years), it might still be acceptable. This shorter income history could be okay if there are positive factors to balance it out.
Let’s say you’re a nurse who started teaching CPR classes a year ago. You’ve earned steady income from these classes, and you expect to keep teaching them. This income may be considered acceptable, even though it’s less than two years old.
You might have income from different employers in your history. That’s okay, as long as you’ve consistently received income. However, you can’t have any gaps in employment longer than one month in the past year. The only exception to this is if your secondary employment is seasonal income (we’ll discuss this more below).
Now, if your secondary income is from self-employment (where you own 25% or more of a business), different rules apply. For this, see B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower.
Verification of Seasonal Income
If you earn seasonal income, here’s what your lender will need to verify.
First, you should have at least a two-year history of seasonal employment and income. For example, if you work at a ski resort every winter, your lender will want to see that you’ve done this for at least two years.
If you receive seasonal unemployment compensation, your lender needs to verify a few things. It must be well-documented, clearly linked to seasonal layoffs, expected to happen again, and reported on your federal income tax returns. For more on unemployment benefits, see B3-3.1-09, Other Sources of Income.
Recent Related Announcements
There have been some recent announcements related to this topic. Announcement SEL-2021-11 was issued on December 15, 2021. Announcement SEL-2021-01 came out on February 03, 2021. And Announcement SEL-2019-07 was published on August 07, 2019.
References
For more details, visit Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income of the Fannie Mae Selling Guide.