Does anyone understand how to count Pastoral Housing Allowance Income in order to obtain a mortgage loan to purchase a home in NC, SC, VA, or GA?

You are going to say “Amen, it’s about time someone understands my income!” because we do understand pastor, priest, or reverend income and it is a little understood income among mortgage lenders.

Here is the definition of Pastoral Housing Allowance and other income plus how we can approve VA, FHA, USDA, and conventional mortgage loans with it

The IRS looks at the housing allowance portion of a pastor’s income as an exclusion from income. Therefore the housing allowance is not reported on the personal tax returns as taxable income.  Even though it is not reported on the tax returns, a pastor’s housing allowance can be used in qualifying for a mortgage loan to purchase or refinance a home.  As long as we can document the receipt of the housing income through a signed letter from the church/employer stating the actual breakdown of the pay and by providing copies of the checks received, we should be able to count the housing allowance as income.  Some employers will even put the housing allowance on the w2 as a nontaxable amount which makes it even easier.  With correct documentation over 24 consecutive months, even a car allowance may be counted either as income or to offset car payments.  Believe it or not, our previous blog on pastoral income is one of our most read blogs on our website.  The reason the blog is so popular is that many lenders are either not familiar with how a pastor’s income works or because many lenders just will not count that portion of the income.  On top of counting a housing allowance as income, we can often gross it up to a higher amount since it is nontaxable!  Learn how to gross up nontaxable income here

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