Answer

Both overtime and bonus income may be used to qualify if the borrower has received such income for the past two years and it is likely to continue.
The lender must develop an average of bonus or overtime income for the past two years, and the employment verification must not state that such income is unlikely to continue.
Periods of less than two years may be acceptable provided the lender justifies and documents in writing the reason for using the income for qualifying purposes.
An earnings trend also must be established and documented for overtime and bonus income. If either type shows a continual decline, the lender must provide a sound rationalization in writing for including the income for borrower qualifying.
If bonus income varies significantly from year to year, a period of more than two years must be used in calculating the average income.

Handbook 4155.1: 4.D.2.b-c

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