Long Island Mortgages for Police, Firefighters and EMTs

Most police and fire pay counts toward a mortgage on Long Island, but not all of it right away. Your salary can count while you’re still in the academy or on probation. Overtime needs a history first: at least 12 months on a conventional loan, one to two years on FHA and generally two on VA.

The rules are the same for Nassau or Suffolk PD, county corrections, town and village departments, the State Police, NYPD and FDNY. “Conventional” here means Fannie Mae’s rules, and some lenders add their own.

What counts on a police or fire paystub

Nassau PD lists a shift differential of up to 12%. Suffolk PD lists overtime as “when available,” which is why lenders want a history before they count it.

Own a side business or get paid on a 1099? Conventional and FHA lenders treat that as self-employment: they go by the profit on your tax returns, not your paystub, and usually want two years of it. See my guide to self-employed mortgages on Long Island. If your returns don’t show enough income, I also offer bank statement and 1099 loans, through lenders I work with.

Academy recruits, probation and new hires

Your salary can count while you’re still in the academy, and conventional rules don’t treat probation differently. Some lenders are stricter, which is one reason I compare them. In Suffolk, PD probation runs 18 months, including the 7-month academy, and recruits get the starting salary while they train.

New to the job? Lenders look at your last two years of work, not just this job, so a prior job counts, and FHA and VA can count time in college or the military.

Joining Nassau PD? You’ll have to live in Nassau, Suffolk, Westchester or one of the five New York City boroughs, so keep your house hunt inside that area.

• Hired but not started? I work with lenders that close on an offer letter, before your first paycheck. On a conventional loan you can qualify on a final, accepted offer for a one-unit home you’ll live in: base pay only, a start date within 90 days after closing, and extra savings. If the offer still depends on a background check or a medical or psych exam, those have to be cleared before closing. Not every lender does this, and some add their own limits.
• Step raise coming? On a conventional purchase, a base pay raise that starts within 60 days after closing can count if your employer confirms it in writing.

How lenders count police and fire overtime

• Conventional: at least 12 months if the rest of your file is strong, and two years is better. Steady or rising overtime is averaged over this year and last.
• FHA: one to two years, and the lender uses the lower of your two-year and one-year averages.
• VA: generally two years, and it has to look likely to continue.

Say you made $30,000 in overtime two years ago and $18,000 last year. FHA’s two-year average is $24,000 and its one-year average is $18,000, so it uses $18,000.

If your overtime dropped, a conventional lender has to see it level off, then uses only what you’ve earned since.

Know your pay is about to drop, for any reason? The lender has to qualify you on the lower amount, so tell me before we set a closing date.

Out on injury leave

Back at work by your first mortgage payment? Conventional and FHA loans can count your regular pay. If not, the lender uses your lower leave income, and extra savings can top it up. A conventional lender can also leave a documented injury leave out of your overtime average.

Your pension, your 457 and the down payment

Your department pension won’t help with the down payment. On a conventional loan, a retirement account counts only if it’s vested and you can take money out while you’re still working. These may work instead:

• A deferred comp plan through work, often a 457. A public plan generally won’t let you withdraw while you’re working, but a loan against it may work, so ask whether your plan offers loans.
• A 401(k) or IRA from a past job, if it’s vested and you can withdraw. FHA counts up to 60% of it, less any loans against it, unless you show more is available after taxes and penalties.
• A loan against a 401(k). Conventional loans allow it, and the lender can leave its payment out of your monthly debts.
• A NYSLRS loan against your own contributions, if you’re a working member with at least a year of service credit and enough contributions in your account. Part of it may be taxable, and each lender decides how to treat it.

VA loans if you’ve served

Served, including in the Guard or Reserve? Check your VA eligibility. A VA loan has no PMI, and VA itself tells buyers to compare more than one lender. My guide to VA loans on Long Island covers the rest.

Volunteer firefighters and EMTs

Most fire departments on Long Island are volunteer, and so are many ambulance corps. If that’s you, your day job is what a lender counts. Volunteer service is unpaid, so it isn’t mortgage income. LOSAP, the service award many fire districts offer, is a pension-like benefit for later, not money for income or a down payment today.

Which loan fits

It comes down to how much of your pay has a history, your credit and your savings. I compare the lenders I work with to find one whose rules fit your pay. Read up on conventional and jumbo loans, FHA loans or all my loan programs.

Need down payment help? I offer private down payment assistance programs available through lenders I work with. Also see DSCR loans for a rental, mortgages with a low credit score and my first-time buyer guide.

Documents you’ll want

My mortgage document checklist has the full list, from your latest paystub to two years of W-2s. Also have these ready:

• Year-end paystubs for the last two years, or a letter from payroll, showing base, overtime and differential separately
• Your accepted offer letter, if you haven’t started
• Retirement account statements, and the loan papers for any 401(k) or deferred comp loan
• A letter from your department with your return-to-work date, if you’re out on leave

Frequently asked questions